Preamble

The House met at half-past Eleven o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

ALLIANCE & LEICESTER PLC

Ordered,
That the promoters of the Alliance & Leicester plc Group Treasury (Transfer) Bill [Lords] shall have leave to suspend proceedings thereon in order to proceed with it, if they think fit, in the next session of Parliament, provided that notice of their intention to do so is lodged in the Private Bill Office not later than the day before the close of the present Session and that all fees due up to that date have been paid;
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That no further fees shall be charged to such stages;
That no petitions against the bill having been presented within the time provided for petitioning, no petitioners shall be heard before any committee on the bill save those who complain of any amendment as proposed in the filled-up bill or of any matter which arises during the progress of the bill before the committee.—[The Second Deputy Chairman of Ways and Means.]

Message to the Lords to acquaint them therewith.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

The Minister was asked—

BSE and Scrapie

Mrs. Jackie Lawrence: If he will make a statement on his Department's risk reduction strategy for BSE and scrapie. [137130]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): The risk of BSE is reduced by a range of measures, including the ban on meat and bonemeal in feed, specified risk material controls, the destruction of transmissible spongiform encephalopathy suspects and, in cattle, the over-30-months scheme, the selective cull and the offspring cull.
Since becoming Minister, I have pursued research into improved disease control measures, which enabled the development of the current proposals for the national scrapie eradication and control plan. I have also, on a precautionary basis, put in hand preparation of a contingency plan setting out actions that might be taken in different scenarios if, in future, BSE is found to be present in sheep.
As the House is aware, food safety is of course a matter for the Food Standards Agency.

Mrs. Lawrence: I thank my right hon. Friend for that answer, but can he confirm that any scientific advice that he receives will be made public, and does he accept that that principle is essential to protect the livelihoods of our farmers and the interests of the public in general? Unfortunately, that fact appears to have been forgotten by Ministers in the previous Tory Government.

Mr. Brown: My hon. Friend is absolutely right. When scientific advice that will inform the Government's policy decisions becomes available to me, I put it in the public domain as a matter of policy so that everyone can see what that advice is and draw their own conclusions. I do that to inform debate. If I had doubts about such a policy—I do not—I would find that the current policy was being urged on me by Lord Phillips in his report.

Mr. David Curry: Does the Minister agree that, however great the temptation to indulge in vicarious pleasure at the problems currently being experienced in France, a major BSE outbreak in that country and the collapse of consumer confidence will do nothing to help the British beef industry? Will he therefore do all that he can to assist the French in combating their problems—if not to help their farmers, at least to ensure that our farmers can export the safest beef in the world?

Mr. Brown: I have sent Lord Phillips' report to my French counterpart, Jean Glavany. I hope that the thorough examination that Lord Phillips undertook will help other European Union member states and others world wide better to understand this appalling condition in animals, which has implications for human health, and ways in which to get it under control and eliminate it.

Ms Joan Walley: I thank my right hon. Friend for all the measures that he has taken, but, given that protein has been found in liquid condensate and that the Spongiform Encephalopathy Advisory Committee recommended that that should not be spread on land, will he explain how MAFF can guarantee that placing untreated liquid condensate in, on, or under the ground is safe?

Mr. Brown: My hon. Friend asks, essentially, a question about food safety. As she will know, that is a matter for the Food Standards Agency and the Secretary of State for Health, rather than for me, although, of course, agricultural practices are a matter for my Ministry. The lead advice in that regard comes from the Food Standards Agency, and the Ministry will follow such advice.

Mr. William Thompson: What steps, if any, are the Government taking to ensure that any meat imported from France, and derivatives from it, are free from contamination?

Mr. Brown: This country's public protection measures, which are very powerful, include a ban on selling any beef product derived from animals that are over 30 months. I cannot go further than that because the hon. Gentleman's question is essentially about food safety, which is now outside my ministerial responsibility. The Secretary of State for Health, not me, takes the lead in that regard, but we in government act on the advice of the Food Standards Agency, which is carefully considering those matters. So far, it has not recommended to the Government a ban on produce from France.

Mr. Denzil Davies: On the question of French beef, has my right hon. Friend seen a report in today's Financial Times that the Commission will spend up to 60 million euros on providing private storage facilities for the purpose of intervening in the market and, presumably, buying French beef, which, sadly, might be infected with BSE? Does he agree that that is, to say the least, a rather bizarre use of public funds?

Mr. Brown: The use of private storage aid in these circumstances is something which I understand the Commission has under consideration. The food safety implications will of course be considered by the Commission, but they will also be considered in the United Kingdom by the Food Standards Agency. It is important that these policy matters are dealt with in terms of protection of consumers and protection of food safety, and not in terms of market competition or, indeed, of trade rivalries.

Mr. Tim Yeo: Is French beef safe for British consumers?

Mr. Brown: The hon. Gentleman was the Opposition spokesman when the Food Standards Agency was established. Underpinning the establishment of that agency was the fundamental decision to take Agriculture Ministers out of the decision-making process so that the decision would be made—[Interruption.] Let me finish the answer. Ministers were to be taken out of the process so that decisions would be made by the Food Standards Agency in its advice to Government. Subsequently, that advice goes to the Secretary of State for Health.
To answer the hon. Gentleman's question directly, the recommendations from the FSA are clear: there are no health reasons to ban the importation of French beef. That is what the agency is currently saying to us; that is its professional advice to Government. If the hon. Gentleman wants to dispute that advice or has some extra-scientific evidence of his own, he should put it in the public domain. Has he anything to put in the public domain? No, he has not.

Mr. Yeo: On the contrary, this week, in the light of clear increases in the BSE level in France, the French Government have started to take the measures that in Britain were taken four years ago. In view of that, is it not clear that, as a precaution to protect British consumers, it would be wise to stop potentially BSE-infected French beef coming into Britain—particularly as, because the

Government have refused to introduce honesty in food labelling, British consumers do not know whether they are eating safe British beef or dangerous French beef?

Mr. Brown: Let me remind hon. Members that, in 1996, the hon. Gentleman said to the House that the public protection measures that have been put in place or are now under consideration in France were a waste of money. I cannot believe that any hon. Member would take advice on food safety from Ministers in the previous Conservative Government—who incompetently presided over the BSE crisis in this country, and now seek to advise on what should be done in France.

Veterinary Products

Mr. Mark Todd: When he last reviewed the costs of veterinary products available to farmers.[137132]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): On 30 March, we announced as part of the Government's strategy for agriculture an independent review of dispensing of prescription-only medicines by veterinary surgeons. Additionally, the Office of Fair Trading is conducting an investigation into certain aspects of the supply of veterinary medicines in the United Kingdom, including whether there is any evidence of anti-competitive practices that breach UK law.
I think that the House will also want to know, although the decision is not finally made, that I am considering commissioning a review of the costs and utilisation of all agricultural inputs, including veterinary products and interventions. I hope to have more to say about that next week.

Mr. Todd: I thank my right hon. Friend for that answer, particularly the latter part of it. Farmers in my constituency regularly draw to my attention the price discrepancies between the veterinary products that they themselves can purchase and those that their competitors and colleagues in France can purchase there. Is it not another example of how British regulatory environments fail to support the competitiveness of British agriculture? It is another example given by the better regulation taskforce, which published its report yesterday on the environmental regulation of farming.

Mr. Brown: I think that my hon. Friend is on to a very strong point—although not so much the regulatory framework as the trading framework is at the heart of it. That is why I am considering taking a longer look at it with others who represent the different interests in the industry, including the interests of farmers. I welcome what my hon. Friend has had to say on the better regulation taskforce's work, and I commend Lord Haskins on the job that he has done.

Mr. James Gray: The Minister will be aware of the onward march of the varroa jacobsini mite through the beehives of England. Is he aware that, under the veterinary medicines directorate rules, only the German-created drug Bayvarol may be used to fight varroa jacobsini—whereas, in the old days, we used to use good old-fashioned talcum power, which was more or less free. Bayvarol costs £10 per hive per year. That cost


is putting bee farmers out of business and is having a significant effect on arable agriculture. Will the Minister pay particular attention to beekeeping in his review?

Mr. Brown: In fact, we have a research programme designed to help beekeepers. There is some money in my Department's research budget for precisely that purpose. The use of an intervention in one part of the European Union and doubts about whether it can be used in this country are precisely the matters that I want to be thoroughly examined.

Mr. Michael Clapham: My right hon. Friend will be aware that the cost of veterinary services can be crippling, particularly for the deer industry. The deer farm in my constituency—Round Green farm—told me this morning that the cost of a qualified vet being present at the abattoir when animals are dispatched is £43 an hour, while that of a meat inspector is £14 an hour. The time at the abattoir is split between the meat inspector and the qualified vet, but the industry is fearful that, as from next April, the regulations will change and a vet will be required to attend the abattoir all the time that animals are being dispatched. Will my right hon. Friend therefore look at that issue and ascertain whether it would be possible for a qualified meat inspector to be present at the abattoir, rather than a fully qualified vet?

Mr. Brown: My hon. Friend is right. I have already considered whether we could use meat hygiene inspectors, rather than qualified vets, under the EU directive, which is more than 30 years old. I have managed to convince my ministerial colleagues in the EU that we should review the directive, but of course that will take some time. In the meantime, the cost of the veterinary services represents a heavy burden on the small abattoir sectors. The Maclean report is now being considered in government and I hope to announce a response to that soon. I think that it is a response that my hon. Friend will welcome.

Mr. Malcolm Moss: We are all well aware that the high cost of veterinary products in Britain represents a heavy burden on British farmers. As has been said, those costs are higher than in the rest of Europe, but is not the real problem the over-zealous red tape of the kind highlighted by Lord Haskins in the better regulation taskforce report, published yesterday? That report paints a nightmarish scenario of farmers struggling against some of the strictest animal health and welfare controls in Europe, with hordes of pestering inspectors descending on them daily. When will the Government get off farmers' backs?

Mr. Brown: We have already had the red tape reviews, and the Government have accepted the overwhelming bulk of their recommendations, but we need to be careful because the culture of deregulation and the ferocious assault that was made on the Meat Hygiene Service in the late 1980s and early 1990s contributed to the SSE disaster that overwhelmed our country and had the most tragic implications for human health. So those who simply call for a bonfire of the regulations are wrong. Lord Haskins has adopted the right approach: he aims for better regulation, not no regulation.

Milk Consumption

Mr. David Kidney: What steps he is taking to encourage the consumption of milk.[137134]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): We drafted, and Parliament approved, the necessary legislation to enable dairy producers to fund their own promotional activities via a statutory levy. They are now doing so via "The White Stuff' campaign, in conjunction with processors.
I am also pleased to announce to the House today that we intend to make good the reduction in EU subsidy for the school milk scheme from 1 January. The Department of Health and the Department for Education and Employment are joining MAFF in funding England's contribution to bridging the funding gap.

Mr. Kidney: That is excellent news about the scheme for school milk, especially about the free school milk for those children who might otherwise not get that nutrition and energy in school. I am glad that the label "milk snatcher" stays firmly attached only to the Conservative party. Does my right hon. Friend accept that some schools are still reluctant to take part in the scheme to deliver milk to their schoolchildren? Will she do her part in encouraging a better take-up of that excellent scheme around the country?

Ms Quin: My hon. Friend makes a good point and I thank him for welcoming my announcement. It is important to work with local authorities and schools around the country. Obviously, the scheme is voluntary, in the sense that local authorities and schools can choose to take it up. However, I am keen that they should look at the scheme and the variety of products that can be given to schoolchildren, including lower-fat milk, yoghurts and so on. I am keen to ensure that the take-up of the scheme is as good as possible.

Mr. David Heath: I agree with the hon. Member for Stafford (Mr. Kidney) and welcome the Minister's announcement. She knows that I have supported the generic marketing campaign. Does she agree that there is little point in increasing the volume of milk consumption unless we can also increase the profitability at the farm gate for dairy farmers? To that end, is she as disappointed as I am with the report on supermarkets by the Competition Commission, which, although it received evidence, seemingly had nothing to say? Will she institute a series of supply chain studies in the various sectors—starting with milk—publish those reports and allow us to see how we can maintain a sustainable increase in the price of milk to help dairy farmers?

Ms Quin: The hon. Gentleman makes a number of interesting points. I welcome the support that was given by both sides of the House to the order that we proposed, which allowed the levy to be raised to promote milk consumption. I welcome the Competition Commission's commitment to developing a code of practice for the food supply industry, including the dairy sector. That built on the work that MAFF had undertaken in the food chain initiative. We are keen to take the work forward and we hope to make further announcements in due course.
Obviously, there has been some increase in the price of milk, which helps producers, but we take seriously the importance of good communication across the food chain and of initiatives to add value to milk products.

Mr. David Drew: One issue that will help consumption is the continuation of the doorstep delivery. We are used to seeing a decline in such deliveries, but it is important for older people. In my constituency, three dairy rounds in Dursley were told, at less than a week's notice, that they had to pick up their milk from Stroud, an additional 13-mile journey. Is it not fair that we allow older people in particular to have their milk made available to them by making sure that the doorstep delivery continues into the future?

Ms Quin: My hon. Friend makes a good point: the doorstep delivery service has been much valued by consumers. We are keen that the dairy industry is able to supply consumer needs. Obviously, it has to evolve to changing consumer tastes, but the doorstep delivery system is a valued part of milk supply.

Mr. Nigel Evans: I hope that the Minister is able to support doorstep delivery. In certain villages where the local shop has closed, the delivery is the only regular supply of food. When I am in Ribble Valley, I get my pinta delivered to my home. It is a superb service. We are trying to encourage milk consumption, but I am concerned with the plight faced by dairy farmers. A farmer came to see me last week and said that the amounts he was getting for milk had halved in a couple of years, and he felt that he was unable to continue in the dairy industry. What encouragement can the Minister give to dairy farmers in Ribble Valley and throughout the country that they will have a future in dairy farming?

Ms Quin: There has been a recent firming of prices of milk. We welcome that trend, and feel that the previous low prices were not sustainable. In addition, we have taken a number of measures to help the dairy industry—not only our efforts to boost consumption, but the agrimonetary payments for dairy producers and a number of specific measures regarding the removal of charges that dairy farmers would otherwise have had to face. On dairy farming, we have responded effectively to the concerns of producers over the past year.

Flood Prevention Scheme

Mr. Andrew Dismore: If he will make a statement on progress of the flood prevention scheme for Edgware and Burnt Oak.[137135]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): I understand that the Environment Agency submitted a planning application for the Silk stream flood alleviation scheme at the end of October and that consideration is currently being given to when the work might commence.

Mr. Dismore: My constituents very much welcome that scheme, but are concerned about the time that it is taking. After the floods in 1992, the previous Government did nothing about trying to sort out the flooding problems in my constituency. My constituents are concerned that

after planning permission is given, it could take up to nine months for the scheme to be approved by the Ministry, and a further year before construction work can start, with a planned finish date of 2005. Will my hon. Friend assure me that he will do all that he can to make sure that that time scale is shortened, if that is practical?

Mr. Morley: The fact that the scheme has been submitted for planning permission is an important milestone in its development. In due course, it will come to the Ministry, where its environmental and technical merits will be evaluated, as I am sure my hon. Friend understands. Following the announcement of an extra £51 million for flood defence, it is possible for the Environment Agency to make decisions on prioritising schemes. Those decisions are made locally in relation to the agency's own programmes.

Mr. John Bercow: May I, on this one occasion, endorse the call of the hon. Member for Hendon (Mr. Dismore) for the speediest and most efficacious action on that front? I am making that request and going across party lines to endorse the hon. Gentleman's call because my mother is a constituent of his. Although she lives in Mill Hill, not Edgware or Burnt Oak, she is extremely apprehensive about the matter, which is the one subject on which she is vociferous in her support for the hon. Gentleman.

Mr. Morley: The hon. Gentleman's mother is fortunate in being so well represented. As we have heard, my hon. Friend the Member for Hendon (Mr. Dismore), who is her Member of Parliament, is assiduous in making sure that the scheme is brought forward.

CAP Dairy Regime

Ms Dari Taylor: What his priorities are for the next reform of the common agricultural policy dairy regime.[137136]

Mr. Andrew Robathan: If he will make a statement on his policy for the future of the dairy industry, with special reference to milk quotas.[137140]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): May I tell my hon. Friend and the hon. Gentleman that I regard this as a matter of fundamental importance for the dairy industry and the future of the common agricultural policy? My priority is to bring about an orderly phasing out of the European Union milk quota system on the basis that I and other like-minded EU Agriculture Ministers advanced in the recent Agenda 2000 negotiations. My aim is to ensure that UK milk production should not be unreasonably constrained by quotas, and that through liberalisation UK producers should have the opportunity to participate in high-value export markets.

Ms Taylor: In thanking my right hon. Friend for his answer, may I urge the Government to keep pressing for the orderly and speedy end of milk quotas, as lowering prices will have the most effective benefit for efficient


dairy farmers. Does my right hon. Friend believe that phasing out those quotas relies heavily on building alliances with European partners?

Mr. Brown: My hon. Friend is right, as we will not be able to phase out quotas in the European Union by quarrelling incessantly with the other 14 member states. I am enormously encouraged by the fact that Ministers from other countries who take an interest in the reform proposals advanced by the UK Government and I met recently as guests of the Italian Minister to discuss further reform of the CAP. I set great store by the review clause scheduled for 2003 and the discussions in the EU on whether or not it is possible to pull that clause forward to 2002.

Mr. Robathan: May I remind the Minister that last October he kindly agreed to come to my constituency to see dairy and beef farmers who are struggling? Those who have survived would still like to meet him and I very much hope that he will be able to visit them in the near future. While I agree with his policy, in the unlikely event that he is still Agriculture Minister at the time of the CAP reform—

Mr. Steve McCabe: He will be there longer than you.

Mr. Robathan: The Minister may have moved up or down, or even—we hope—across to the Opposition Benches. What will happen if he is still Agriculture Minister at the time of the review in 2003 and is unable to persuade his European partners of the need for the quota system to be withdrawn?

Mr. Brown: I thank the hon. Gentleman for his kind wishes for my personal future in this post. I would point out that I have outlasted most of my predecessors. I think that I am also the fourth longest-lasting Minister in the Council of Ministers. There seems to be a rapid cull of Agriculture Ministers, as well as some of the animals for which we are responsible.
On the substance of the hon. Gentleman's question, the UK's views are clear and well known and, to be honest, they should not be a matter of party politics. We want to do the best thing for the dairy sector and for our own dairy farmers. The review proposals that we put forward in the Agenda 2000 round were right. I am convinced that the EU will have to return to our proposals or something similar in future. I argued the case vigorously with the other Ministers in the Council of Ministers and I am making progress.
Finally, I welcome opportunities to discuss these matters directly with those in the dairy industry and, although I have not been able to do it yet, I would like to visit the hon. Gentleman's constituency and meet the dairy farmers and, perhaps, those from neighbouring constituencies as well.

Mr. Huw Edwards: Does my right hon. Friend agree that many dairy farmers have seen the price of raw milk fall considerably in recent years as the power of the supermarkets has increased? This matter was seriously looked at by the Competition Commission following the original recommendation of the Welsh Affairs Committee. Does he agree that, in order to

re-establish their position in the market, dairy farmers should be encouraged to work in partnership with each other and form co-operatives?

Mr. Brown: As my hon. Friend knows, I agree with that proposition. I think that vertical integration in the industry is part of the way forward. It also means that there has to be much more co-operation between retailers, processors and producers. As people have heard me say time and again, I believe that each sector of the highly integrated supply chain has a vested interest in the well-being—which means the profitability—of other parts of the chain. My hon. Friend is on to a strong point. There is a pressing need for a good study of how the supply chain works, where the strengths and weaknesses are and how power is apportioned. I am reflecting on that and hope to have something further to say soon.

Miss Anne McIntosh: Does the Minister think it fair that British milk quotas will not go up until 2005, whereas four other EU countries have had their milk quotas increased? Is it fair to our milk producers that we have to rely on French imports into Britain until that time?

Mr. Brown: I do not think that the quota system serves our country well, nor do I think it fair that during the Agenda 2000 negotiations I was saddled with commitments that had been entered into by the previous Government with regard to Ireland's quota dating right back to 1983–84. The solution is not to quarrel over the allocation of quota; it is to remove the instrument altogether. That should not come as a sudden shock to dairy farmers throughout the EU. There should be a progressive phasing out of the instrument. I still think that our proposals to depreciate it over six years are the right way forward.

Organic Farming

Angela Smith: What assistance is available to farmers wishing to diversify into organic production.[137137]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): Under the England rural development programme, the organic farming scheme provides conversion aid under five-year agreements to farmers in England. The budget for the scheme over a seven-year period up to 2007 is £140 million. In addition, the organic conversion information service—OCIS—which is funded by MAFF, provides free advice to potential organic farmers.

Angela Smith: I warmly thank my hon. Friend for that answer that shows a real commitment to organic fanning, that we have not had in this country for many years. One of the problems encountered by people interested in converting to organic farming is that of co-ordinating information, advice and technical assistance. Will my hon. Friend ensure that there is co-ordination of technical assistance and advice, as well as help with marketing?

Mr. Morley: My hon. Friend makes a good point. Those who choose to convert to organic farming need technical and business support. We provide that through


our research and development budget, which has been doubled to £2.2 million. There is also a range of R and D projects relating to soil, fertilisers and manure, worth about £8 million a year, which is beneficial to the organic sector. Through OCIS, people get help, support and backing, as they do through the Soil Association and other organisations that back farmers.

Mr. James Paice: The Minister will know that a crucial part of organic farming is crop rotation, to keep the land clean, and that that always means the inclusion of root crops. What are the Government doing to prevent the British sugar industry from being destroyed by the proposals of Commissioner Lamy, which would not only damage our industry but destroy the cane industry in the Caribbean?

Mr. Morley: That was an ingenious way of getting sugar beet into a question on organic farming. These are major issues for our sugar beet sector, which is important in my constituency. We are aware of the concerns and have received representations from sugar beet farmers. We are aware of the proposals and are giving careful thought to the issues.

Joan Ruddock: I congratulate my hon. Friend on his great success in constantly getting more funding and resources for organic farming, and I apologise to him because I am constantly asking for more. Will he confirm that the United Kingdom is the only country in the European Union that does not give financial rewards for the environmental benefits of organic farming, and does he plan to do anything about that?

Mr. Morley: Studies have shown that organic farming brings environmental benefits, and we recognise that as a Ministry and as a Government. We have a range of agri-environment schemes, such as countryside stewardship and environmentally sensitive areas, designed to meet different objectives. It may well be that organic farmers can choose to go into countryside stewardship schemes. We are to review our agri-environment programme in 2003. Given the substantial extra sums that will go into the schemes through the rural development programme, it may be opportune to consider organic stewardship schemes for the future, and I assure my hon. Friend that we will give that careful consideration.

Bovine TB

Mr. Geoffrey Clifton-Brown: If he will make a statement on tuberculosis in the bovine herd. [R][137138]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): Cattle TB is a complex and serious animal health problem that is on the increase in many areas of the country. Previous control policies have not worked, and the Government are committed to pressing ahead with extensive research and field trials to identify more effective control measures.

Mr. Clifton-Brown: The Minister will know that the latest figures for October, showing a 20 per cent. year on year increase in TB cases, show that this serious problem is getting worse. She will also know, from the new case

in Shropshire, that the geographical area of TB is spreading. What action does she propose to take outside the Krebs trial areas to deal with the problem?

Ms Quin: We recognise the increase in cases. My noble Friend Baroness Hayman gave evidence on this issue to the Select Committee yesterday. We have increased spending on the TB strategy to £45 million this year, and further increases have been announced in the spending review. As the hon. Gentleman may well know, we raised the compensation payments to farmers from 75 per cent. to 100 per cent., which he will presumably welcome. We have to proceed with the trials on the basis that has been recommended to us, and we have held firmly to that, even though, as he knows, there are criticisms of the trials from the opposite point of view to the one that he has expressed. We have to be guided by the trials in determining what action needs to be taken.

Mr. Eric Martlew: Does my hon. Friend agree that the real solution to the problem of bovine TB lies not in the tests being held but in the development of a suitable vaccine? I asked in the House four years ago when such a vaccine would be ready and whether the necessary resources were being put in. Can my hon. Friend give the House a positive answer today?

Ms Quin: We are putting the resources in, but developing a vaccine is a difficult task, and it is still not near completion. I would love to be able to promise my hon. Friend that it was on the verge of being introduced, but it is not, so we have to accept the recommendations of the Krebs report and proceed with the trials.
Although the development of an effective vaccine would be tremendous news for all concerned, farmers are being encouraged to take other practical measures—such as adopting better husbandry techniques—to avoid some of the obvious risks of spreading TB. We are trying to make farmers aware of those other measures.

Mr. Edward Garnier: Cattle with TB have to be slaughtered, but slaughterhouse costs are high and getting higher. Will the Minister implement as a matter of urgency the recommendations of the Maclean report?

Ms Quin: My right hon. Friend the Minister answered that point a little earlier, but perhaps the hon. and learned Gentleman did not hear it. Clearly, we are considering the Maclean report recommendations, and hope to make an announcement very soon.

Biofuels

Dr. Phyllis Starkey: If he will make a statement on research funded by his Department into biofuels. [137143]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): The Ministry spends around £0.6 million per annum on energy crops research, concentrating on the development of higher-yielding crops and of improved crop protection which avoids the need for the use of pesticides. Furthermore,


under our rural development programme, £30 million will be available to support the planting of energy crops and to set up producer groups.

Dr. Starkey: I welcome the Government's commitment to funding research on energy crops and biofuels. Does my hon. Friend agree that such crops have the potential to provide more environmentally friendly alternatives to fossil fuel, and that they can be a very useful diversification opportunity for farmers? Will she outline any measures that she is proposing to build on the pre-Budget report to look at ways of improving the economic competitiveness of biofuels?

Ms Quin: My hon. Friend makes some important points. This is an exciting area for agriculture and for the general economy. MAFF is very keen to play its part in the examination of new alternative energy sources. A number of Departments are interested. A fund exists in the Department of Trade and Industry for alternative energy sources, there is the new opportunities fund announced by my right hon. Friend the Prime Minister, and there are also the resources announced in the pre-Budget report.
I recently launched the second stage of the IENICA project in York, which is also looking at the development of these new opportunities across the European Union as a whole.

Mr. A. J. Beith: Does the Minister agree that the most valuable innovation would be a serious tax incentive for biodiesel? Is the Ministry giving the Chancellor of the Exchequer the evidence that he needs to take a step that would be in the interests of the Government's environmental policy and their agricultural policy?

Ms Quin: We have had discussions very recently with the Treasury on these matters. It is obviously important to look at the economics involved in biofuels, to determine the most viable prospects for such alternative crops. We are very keen to take the work forward. There are possibilities, and the new developments happening all the time alter the previous economic appraisals of viability. For that reason, it is important for Government Departments, including MAFF, to look at the issue very closely.

BSE Inquiry

Mr. Russell Brown: What steps he is taking to implement the recommendations of the BSE inquiry report. [137144]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): The Government are studying the report's findings with care, and looking closely at the lessons that flow from them. Some of the issues have already been addressed through the creation of the new Food Standards Agency, the appointment of consumer representatives to advisory committees, the placing of scientific advice in the public domain and the switch from deregulation to better regulation. My right hon. Friend the Secretary of State for Health and I also announced on 26 October that there will be a new national fund for the care of variant CJD victims and financial arrangements to benefit sufferers and their families.
The Government's substantive response to each of Lord Phillips' points will be published in the coming months and the House will have an opportunity to debate the report in Government time. I promise that I will provide the House with an update on progress before the end of the year.

Mr. Russell Brown: I thank my right hon. Friend for that answer, especially the reference to better regulation. Will he confirm that the very culture of deregulation under successive Tory Governments made it much more difficult to ensure that important protection measures were enforced? Is it not obvious from the recent comments of the Leader of the Opposition about bonfires of food safety regulations that these people have just not understood and learned the lessons of BSE?

Mr. Brown: The whole culture of calling for bonfires of regulations rather than for better regulations is wrong. That is the view of the Government; it is also the view of Lord Phillips. In the report, Lord Phillips makes some very sharp points about those who harass public regulators when they are trying to do an important job to protect animal health, particularly—in the case of BSE—when there are important human health implications.

Oral Answers to Questions — SOLICITOR-GENERAL

The Solicitor-General was asked—

Financial Crime

Mr. David Kidney: What progress he is making in the prosecution of financial crime. [137160]

The Solicitor-General (Mr. Ross Cranston): The Serious Fraud Office continues to deal successfully with an increasing case load. The Government have allocated increased funds of £3.6 million, £4.6 million and £5.6 million in the financial years 2001–03. In respect of those funds, the SFO has entered into a service delivery agreement published on 3 November, which sets challenging targets of increasing case load and reducing investigation and trial times.

Mr. Kidney: Is my hon. and learned Friend aware that there appears to have been no conviction for insider dealing for the past three years and that statistics for other financial crimes such as fraud and money laundering are not even kept separately from all other fraud offences? Does that not convey the impression that officialdom is not serious about the fight against financial crime? Will my hon. and learned Friend assure the House that the prosecuting authorities for whom he is responsible are unbending in their determination to root out financial crime? Will he talk to his ministerial colleagues who also have responsibility for law enforcement to ensure that they share the same attitude?

The Solicitor-General: I can certainly give my hon. Friend that assurance. I think that there have been successful insider dealing prosecutions—perhaps my hon. Friend should talk to the Secretary of State for Trade and Industry. My hon. Friend, who has been heavily involved with the Financial Services and Markets Act 2000, knows


that the Financial Services Authority will have a responsibility in this area, so we are very much on the case. The Attorney-General and I see the prosecutors from the Department of Trade and Industry regularly, and I shall certainly refer them to the points that my hon. Friend has raised.

Mr. Douglas Hogg: Does the hon. and learned Gentleman agree that juries are more likely to convict if the trials can be kept simple? That suggests the absence of conspiracy charges but the presence only of substantive charges and few counts.

The Solicitor-General: The right hon. and learned Gentleman is right that the offences have to be put in a simple way to a jury. The SFO has had considerable success in doing that, demonstrated by the number of convictions that it has obtained in recent times. This involves introducing technology into the courts, and the Lord Chancellor has done a considerable amount in that regard as well. The director of the SFO has argued for a general offence of fraud on the basis that that would make prosecutions more efficient, and the matter is being considered.

Mr. Lawrie Quinn: Is my hon. and learned Friend aware of the excellent work that north Yorkshire trading standards department is doing in that area of crime and of the successful prosecutions that have been brought? Is he content that a local authority organisation should have to take the risk of bringing these cases to court? If he is not aware of the matter, will he have urgent discussions with the Home Office and the Lord Chancellor's Department to review the position of authorities that have to proceed with such prosecutions?

The Solicitor-General: Local authorities certainly play an important role in that area. They prosecute under a range of legislation, such as the Trade Descriptions Act 1968, the Consumer Credit Act 1974 and so forth. I am not aware of the north Yorkshire department's success, but I know that trading standards officials throughout the country play an important part in rooting out fraud.

Foreign Governments (Extradition Cases)

Mr. Christopher Chope: In how many extradition cases his Department is acting on behalf of foreign Governments.[137162]

The Solicitor-General (Mr. Ross Cranston): The Crown Prosecution Service acts for foreign Governments requesting the extradition of persons to their states. It ensures that formal extradition requests comply with any relevant treaties or conventions and with the Extradition Act 1989. It also advises requesting states on any further material required. In addition, it drafts proposed committal charges, liaises with all interested parties and appears on behalf of the requesting state at court. At the beginning of November 2000, the CPS was recorded as acting for foreign Governments in approximately 79 individual requests. It is advising foreign Governments in approximately 112 further cases where extradition has been requested.

Mr. Chope: One of those cases involves the Portuguese Government and one of my constituents. Does

the Solicitor-General accept that in such circumstances it is desirable to have communication between those acting for the individual and the Government of the foreign country? Will he do something about the fact that, for four and a half months, even the Portuguese ambassador—in response to my letters and those of my constituent's solicitor—has not been able to get a firm response from Lisbon after a change of circumstances that render continued prosecution, and extradition in this case, redundant?

The Solicitor-General: The hon. Gentleman raised a specific case, in which, I understand, the divisional court will consider an application for habeas corpus soon. So I should not comment on that. As a result of his question, I have reconsidered the role of the CPS in carrying forward extradition requests. At present, under a decision called "Thom", it acts purely in a solicitor-client relationship. I have raised questions about that and I will pursue the matter further.
Importantly, in recent times the CPS has dealt with requests by the United States Government for the extradition of the alleged bombers of its embassies in Africa and it has acted on a request for the extradition of a person alleged to have committed war crimes. It operates effectively in that area, although there is the problem that the hon. Gentleman raised and I will come back to him on that.

Mr. Andrew Mackinlay: What new responsibilities does my hon. and learned Friend anticipate that his Department will have if and when we get around to enacting our obligations under the treaty of Rome to create the international criminal court? Clearly, we will have new duties relating to extradition—duties that we would wish to pursue with vigour.

The Solicitor-General: I agree. As I said, we have already responded to a request by the war crimes tribunal for Rwanda and I anticipate that we would act in the same vigorous way when we receive requests from the new international criminal court.

Human Rights Act 1998

Mr. Andrew Robathan: What assessment he has made of the effect of the Human Rights Act 1998 on the conduct of prosecutions.[137163]

The Solicitor-General: The significance of the Human Rights Act on the work of the Crown Prosecution Service was recognised at an early stage and a high priority was given to ensure that the CPS was well prepared for the implementation of the Act.
In consultation with other prosecuting agencies and leading human rights experts outside the CPS, it developed a comprehensive training programme for prosecutors. That training programme and the continued guidance and advice that CPS staff receive has ensured that cases giving rise to human rights issues have been dealt with professionally and effectively. We had expected that human rights problems would be raised in ordinary cases and that they would be dealt with in the ordinary way. That has proved to be the case.
The Human Rights Act has meant that the courts are considering many new arguments. A number of cases raising human rights points are already going to the appeal courts.

Mr. Robathan: Is not the nub of the matter the fact that, due to the workings of the Human Rights Act 1998, some prosecutions are failing or are not being taken forward by the CPS, because evidence or the methods of gathering it are being ruled inadmissible? Is it not true that since the Government introduced the Act, guilty people will walk free because of its long-term and unforeseen consequences?

The Solicitor-General: That is certainly not the case. As the hon. Gentleman will be aware, the Act provides specifically that legislation continues in force. Courts must apply the legislation. It is the case that several human rights points have been raised, as I pointed out in my original answer, but the CPS is prepared with particular lines to take when such cases are raised. Defenders will raise all sorts of arguments on behalf of their clients—we can expect that. Occasionally, courts at the lower level may favour those arguments, but we have already implemented a fast-track procedure whereby such cases can be taken quickly to appeal. I can give the House an assurance that criminals will not be walking free as a result of the Act.

Mr. Edward Garnier: What lessons has the Solicitor-General learned about the effect of the Human Rights Act on section 2 of the Crime (Sentences) Act 1997, following last week's Court of Appeal decision in the case of the Crown against Offen?

The Solicitor-General: I am aware of the case; the judgment is being considered. That case simply involved an interpretation of "exceptional circumstances" in the Act. The Home Office is considering the implications of the Act, but the important point is that—as I said in my reply to the hon. Member for Blaby (Mr. Robathan)—he courts cannot disapply the Act; they must apply legislation. In some cases, of course, they can make declarations of incompatibility and in such cases we might decide, as a Parliament, that remedial action should be taken and that the legislation should be amended. However, the basic point remains that legislation cannot be disapplied; it must be applied by the courts.

Crown Prosecution Service

Mr. Bill O'Brien: What improvements he has made to the performance of the Crown Prosecution Service over the past three years; and if he will make a statement.[137164]

Mr. Desmond Swayne: What recent assessment he has made of the effectiveness of the Crown Prosecution Service.[137166]

The Solicitor-General: In May 1997, the Government announced that the CPS would be reorganised into 42 areas with the same boundaries as police forces; we also established the Glidewell review to recommend changes to make the CPS more effective against the background of that decision. The review reported a year

later and its recommendations were almost wholly accepted. In implementing the recommendations, the CPS has undergone major organisational change affecting all staff, but has maintained its performance. Extra money was made available in the spending review, including money for a performance improvement programme. That will assist the CPS to become even more effective.

Mr. O'Brien: What action is my hon. and learned Friend taking to improve the rate of successful prosecutions? Does he agree that in order to do so we need to improve the level of representation made in the courts by the CPS?

The Solicitor-General: I agree with my hon. Friend. As a result of the Glidewell recommendations, one change is that the agencies are working together much more effectively. For example, in my hon. Friend's area, in Wakefield, the agencies—the CPS, the police and so on—recently agreed a protocol on racial crimes. As I have said to the House on previous occasions, information technology is much more effective in the agencies; the CPS has an extensive programme for implementing IT. I assure my hon. Friend that all steps are being taken to make the CPS more effective.

Mr. Swayne: Does the hon. and learned Gentleman agree that there is little value in providing additional funds to police forces so that they can apprehend criminals if we are unable to follow that through with successful prosecutions? Is he convinced that the CPS is adequately funded? The representations that I have received—especially from magistrates—are that it is not; it is thus not capable of delivering that follow-through.

The Solicitor-General: The hon. Gentleman cannot have heard the announcements made about, for example, the extra £15 million next year for the CPS and the considerable increase in funding—about 8 to 10 per cent.—over the next three years under the comprehensive spending review. However, I take his point that if the police are to take forward charges effectively, they need effective prosecutors. We are taking steps to ensure that that need is met.

Mr. John Burnett: During the progress of the Bill that became the Crown Prosecution Service Inspectorate Act 2000, I emphasised to the Solicitor-General the importance of effective monitoring of other prosecution agencies. What is the hon. and learned Gentleman doing about that?

The Solicitor-General: The different prosecutors fall under the auspices of other Ministers, but I take the hon. Gentleman's point that each prosecuting agency must work effectively, and an inspection service can ensure that. The point that the hon. Gentleman raised about the extension of the scope of the responsibilities of the CPS inspectorate is an interesting idea and may be taken forward at some stage, but that would require the House to change the 2000 Act.

Business of the House

Mrs. Angela Browning: Will the Leader of the House please give us the business for the coming week?

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The business for next week will be as follows.
MONDAY 20 NOVEMBER—Motions relating to Westminster Hall and Thursday sittings.
Motion on the Immigration Appeals (Family Visitor) (No. 2) Regulations 2000.
TUESDAY 21 NOVEMBER—Supplemental allocation of time motion followed by consideration of Lords amendments to the Police (Northern Ireland) Bill.
Motion relating to the Parliamentary Office of Science and Technology.
WEDNESDAY 22 NOVEMBER—Consideration of Lords amendments to the Fur Farming (Prohibition) Bill.
Motion relating to the coal operating aid scheme.
THURSDAY 23 NOVEMBER—There will be a debate on European affairs on a motion for the Adjournment of the House. That is the pre-Nice debate as you will recall, Mr. Speaker.
FRIDAY 24 NOVEMBER—There will be a debate on the Sixth Report from the Environment, Transport and Regional Affairs Committee on the Environment Agency on a motion for the Adjournment of the House.
The provisional business for the following week will include:
MONDAY 27 NOVEMBER—Consideration of Lords amendments to the Freedom of Information Bill.
I should also like to inform the House that the business for the remainder of November in Westminster Hall will be:
THURSDAY 23 NOVEMBER—Debate on the Ninth Report from the International Development Committee on the effectiveness of EU Development Assistance.
THURSDAY 30 NOVEMBER—Debate on "Opportunity For All: Tackling Poverty and Social Exclusion".

Mrs. Browning: I thank the right hon. Lady for the business for the coming week, but wish to express a little disappointment that she was not able today to announce the date for the rising of the House for the Christmas recess. I mention that for a particular reason—not because Opposition Members are anxious to leave our green Benches, but because we are extremely anxious to receive from the Leader of the House a reassurance that the Prime Minister will come to the Dispatch Box and report on the Nice summit to the House before we go home for Christmas.
This is the third time that I remind the right hon. Lady of the fact that, given the importance of the Biarritz summit which the Prime Minister attended—and where he approved, with other Heads of Government, the EU charter of fundamental rights—but has not yet come to the House to answer questions on, it would be unacceptable for him to dodge giving the House a full report on the Nice summit before the House rises. Given that the Queen's Speech is now the latest that it has been

since the 1920s, I hope that the Leader of the House will reassure us that the Prime Minister will find time to come and report on the Nice summit before the rising of the House.
Will the right hon. Lady consider a debate on the NHS national plan? In his statement earlier in the week, the Secretary of State for Health made the most cursory reference to what is supposed to be a major plank of Government health policy, yet Members have yet to have the opportunity to question the Secretary of State in detail about the plan, which we would very much like to do. I hope that that, too, can be fitted in before the House rises for Christmas.
After 6 December, it is likely to be the last Session of this Parliament. There is much unfinished business, so I would be grateful if the Leader of the House would consult with her colleagues across Departments and consider the issues that have been the subject of a great deal of publicity. Sometimes, the Government have announced—with great flourish and not a little spin—from the Dispatch Box that they intend to embark on major consultation about various policies. When those great plans are then consulted on, many receive such a negative response from people who know something about the subject that the plans are kicked into the long grass and the House never hears about them.
Proposals for the reform of alcohol licensing laws were announced on 10 April. My right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) has received several assurances that the responses to the consultation on those proposals would b' laid in the Library. They are not there yet, but we hear that the consultation could be reported on outside the House, in the next few days, by the Minister responsible. I hope that the right hon. Lady will use her good offices to ensure that such consultations are considered and reported back to the House.
At the Department of Trade and Industry, the consultation on the proposal for employment agencies is now 18 months old—and it has caused great uncertainty among employment agencies. However, the House has not yet had a chance to hear the responses from people in that sector.
We are coming to the end of this Parliament and I inform the Leader of the House that I am compiling a list of unfinished business. It covers the great changes that the Government have said, with great flourish, that they would make, but which they kicked into the long grass once they received responses from people outside. The Government hope that such issues will go away. We do not have short memories, and I am compiling a list for the Library. I hope that the Leader of the House will do the same, and that, at next week's business questions, she will tell us how the Government intend to deal with their unfinished business.

Mrs. Beckett: I am not yet able to give the hon. Lady the date for the Christmas recess, but I shall do so as soon as I can. I was a little surprised by her justification for asking about the date. Nothing is more far fetched than the notion that the Prime Minister would not report on the outcome of the Nice summit. He has reported faithfully on every official summit, and there has never been the slightest suggestion that he would do otherwise.
The hon. Lady will recall that she raised the issue of the Biarritz summit, and I became confused between Biarritz and Nice. No Prime Minister has ever reported on the outcome of informal summits, and I see no reason for my right hon. Friend to begin to do so. However, he has always faithfully reported on the outcome of the proper summits. I take slight exception to the hon. Lady seeking to convey the impression that he might in some way try to avoid doing so.
As for the suggestion that there will be something to conceal from the House because of the major changes that the Prime Minister will make at the summit, I know that the hon. Lady heard him yesterday remind Conservative Members of the 30 occasions on which they gave away the rights to qualified majority voting in the Maastricht negotiations. She said that she has a list, but I have a little list of all the changes that the Conservative party has made to taxation and similar issues since it took us into the European Community. The Government are not attempting to evade their responsibility.
The hon. Lady asked for a debate on the NHS national plan. I am sorry that she did not welcome the outcome of the statement made the other day. Her health authority received an increase in funding of 8.3 per cent., but I understand why the Conservative party wants to draw a veil over such issues—it pretends that nothing is happening.
The hon. Lady referred to unfinished business and said that she was compiling a list. That is fine. She added that Conservative Members did not have short memories, but, I am sorry, I have to take issue with her on that. The Conservative party wants legislation on many issues, such as alcohol licensing, and complains that the Government have not introduced it. Her memory must be extremely short if she has forgotten that the Conservative party has not only complained about every piece of legislation that we have introduced, but said that the legislative programme was far too heavy. However, I should not be surprised by that—the Conservative party says that we are spending too much, but then demands spending increases. After complaining for months that we have introduced too much legislation, she wants us to introduce more.

Mr. Ted Rowlands: May I draw my right hon. Friend's attention to an outstanding report on arms licensing, which was produced this Session by four Select Committees, and, in particular, to its chief recommendation that the four Committees be allowed to conduct prior scrutiny in the next Session? Given the timing of that recommendation, the weight that it carries—it has been unanimously approved by four Select Committees—and the importance of the issue, will she give a positive response to that recommendation and provide an opportunity to debate that important report?

Mrs. Beckett: I will certainly draw my hon. Friend's remarks to the attention of the relevant Department. I must admit that I have slightly lost track of the timing on that matter. As for having a debate on the report, if the House agrees on Monday—it will, of course, be a free vote because it is a House matter—to the Modernisation Committee's unanimous recommendations on Westminster Hall sittings, there will be even more time to debate Select Committee reports. I think that two thirds, rather than half, of Westminster Hall's time will be available for such debates. That will obviously create more opportunities.
On the issue of prior scrutiny, Departments will have to consider that carefully because of its implications and the time that it would take, but I will certainly draw his remarks to the attention of the relevant Ministers.

Mr. Paul Tyler: I strongly endorse the request of the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands).
May I ask the Leader of the House for an urgent statement on the potential use of taxpayers' money for party political campaigning by Members of Parliament? There is a need for clarity. I draw her attention, as I did three weeks ago with her Government colleagues, to Fees Office operations directorate factsheet No. 1, which appears dramatically to extend the use of the office costs allowance for Members to the sending of
newsletters, factsheets, annual reports to their constituents.
The Senior Salaries Review Body, with which I had an interview this morning, is totally unaware of the change in the rules, even though it is undertaking an important re-examination of them. There has been no consultation, as far as I am aware, with any Opposition party. Several hon. Members of all parties have paid for such publications out of their own pockets during this Parliament.
In addition, it is totally inappropriate, at the presumed end of a Parliament, to change the rules in such a way. It looks as though some Labour Back Benchers, who have limited responsibilities in the House and limited staff to undertake those responsibilities, will suddenly receive a taxpayers windfall just before the general election that they can use to campaign. Will the Leader of the House urgently investigate how that rule came to be made and why there was no proper consultation on it? In the meantime, will she have it withdrawn until we have a statement?

Mrs. Beckett: I hope that I can satisfactorily answer the hon. Gentleman's main questions. I am a little surprised that the information has not been conveyed to him. No one consulted Opposition parties, no announcement was made and the SSRB could not be aware of a change in the rules because, as far as I know, there has not been one. If I identify correctly the guidance to which the hon. Gentleman referred, it is issued by the Fees Office, and it is not for me or any Leader of the House to instruct the Fees Office about the administration of expenditure and what is considered proper expenditure of public money. That is the last thing that I could do, and it is for the Fees Office to supervise that matter. My understanding is that it issued guidance to clarify the issue.
It has always been the case that Members have the right, should they wish, to provide information and to circulate newsletters that are paid for by the office costs allowance. I have always understood that some Members do that. Many others do not simply because there is not enough room in their allowance for that. As for the notion either that my hon. Friends are in some way seeking party political advantage or that there is a windfall, I assure the hon. Gentleman that in the Labour party—I do not know what the position is in his party—many people find themselves subsidising the office costs allowance out of their salaries.

Mr. Patrick Hall: Has my right hon. Friend seen early-day motion No. 1103 on the future of community health councils?
[That this House notes that the National Health Service Plan proposes the abolition of the community health councils and the redistribution of their functions between the Patient Advisory and Liaison Service, patients' forums, advisory citizens' panels, local council all-party scrutiny committees and the Commission for Health Improvement; and calls for the Government to engage in a robust national debate and consultation on how to deliver effective patient empowerment by adding to the best of community health councils and particularly by addressing the need for independence, integration locally and nationally, appropriate statutory powers and access to information and support mechanisms to identify and promote best practice.]
Does my right hon. Friend acknowledge that there is considerable interest in these matters both within and outside the House, particularly with regard to independence, local co-ordination and integration? Will she seek to make time for a debate on these matters as soon as possible?

Mrs. Beckett: My hon. Friend makes an important point. There are strong views on the matter on both sides of the House—there is some concern and some support. I cannot undertake to find time for a special debate on the matter in the near future, especially as, if I recall correctly, the paper is still out for consultation. My hon. Friend can, of course, seek the extra opportunities that will be provided should the House agree on Monday to the report on Westminster Hall for Back Benchers as well as for Select Committees.

Mr. Douglas Hogg: Will the right hon. Lady consider reorganising the business next week so that on Monday we can discuss the EU proposal that 48 countries under the EBA—everything but arms—initiative should be able to import into the EU sugar on a tariff-free, quota-free basis? Does she understand that that poses a grave threat to the UK sugar industry? Does she also understand that many feel that it would be entirely destructive? British agriculture is not in a position to withstand any further economic knocks.
I know that there is to be a debate on these matters in Westminster Hall—it is listed for Tuesday. However, there is a real risk that they will considered by the General Affairs Council on Monday or early on Tuesday. That being so, the House should debate the issue urgently.

Mrs. Beckett: If the GAC is discussing the matter on Monday, a debate in the House on Monday could have little influence on the GAC debate. A debate on European affairs is scheduled for Thursday, and I do not feel able to bring it forward.

Mr. Vernon Coaker: Will my right hon. Friend find time for a debate on the excellent GCSE results that were announced today? They are a great tribute to teachers throughout the country, including those in my constituency in Nottingham. Such a debate would enable us to highlight the achievements of pupils gaining five A to C higher grades, and to highlight the real achievements of many schools that are working in exceptionally difficult circumstances with pupils of

low ability. They have been able to move such pupils from a G to an F grade, and have ensured that pupils take one or more GCSEs.

Mrs. Beckett: My hon. Friend makes an important point. I am only too happy to welcome the excellent results in his constituency, where I know he takes a great interest in education matters.
I entirely take my hon. Friend's point. I remember many years ago hearing William van Straubenzee, a Conservative Member, trying to educate some of his colleagues in the understanding that sometimes to raise the achievements of those whose abilities are somewhat limited is even more demanding, but equally worth while, than to raise the achievements of those who are of higher ability. I am conscious that a range of achievement is needed. My hon. Friend is right to identify that at least in part as a result of the Government putting money into education, and also as a result of our encouragement and desire to raise standards, achievements are higher across the board.

Sir Peter Emery: I know that the right hon. Lady takes seriously the historic responsibilities that she has as a defender of all Members, and particularly of the minority. Usually, a Minister who winds up a debate attempts to answer questions that have been raised in the debate. I ask her to refer to recent debates and, if I may be personal, speeches that I made in the defence debate and the procedure debate. By arrangement with the Front Benches, a Minister has only 15 minutes to answer questions, which means that he or she has an even greater excuse not to respond to them. Will the right hon. Lady use her influence—she has no control—through the usual channels to ensure that Ministers winding up a debate have long enough in which to answer the questions put during the debate?

Mrs. Beckett: The right hon. Gentleman makes an important and interesting point, which illustrates the fact that we need to give more thorough and careful consideration to how we handle such issues. All too often, hon. Members make assertions—the press are sometimes even worse—that people should do this or they should do that. However, as I know the right hon. Gentleman fully appreciates, Front Benchers respond to requests that they curtail the time they take to allow more Back Benchers to contribute in the debate. None the less, I take the point that the greater the degree to which that is done, the greater the difficulty in responding to issues raised in the debate. The point is an important one; I cannot undertake to find an answer to it now, but it is a matter to which the House should give careful consideration.

Mr. Paul Marsden: Will my right hon. Friend find time for a debate on the health consequences for pensioners of scrapping the £200 winter fuel allowance, as advocated by the Tories, which would have a devastating effect on 18,000 pensioners in my constituency and on pensioners throughout the country?

Mrs. Beckett: My hon. Friend makes an important point. He will recall that the policy to which he refers is not unprecedented: when they were last in government, the Conservatives scrapped the heating allowance that then existed, so we have seen it all before. I share my


hon. Friend's view that, in the light of long understanding of the incidence of hyperthermia and excess winter deaths in this country, one of the most important steps taken for many years was the introduction of the heating allowance. I am astonished that the Conservatives appear not to have realised in time that when pensioners, understandably, talked about wanting an increase as of right, they did not mean people taking away what had already been given by the Labour Government.

Dr. Evan Harris: I am sure that the Leader of the House shares the Liberal Democrats' disappointment at the actions of the House of Lords in making, in effect, a wrecking amendment to the Sexual Offences (Amendment) Bill. Will she make clear the Government's intentions in that respect? Report and Third Reading will take place in the Lords and the Bill, as amended, will return to the Commons, which is likely to insist on its way; if the Lords reject it again, the Parliament Acts will be used to make sure that the will of the elected House, expressed on a free vote, prevails. Will the right hon. Lady also make it clear that if the Lords make reasonable amendments with which the Commons might agree, they will be given fair wind in this House?

Mrs. Beckett: I am not in a position to give the hon. Gentleman the information he seeks, because the way in which the agenda in the other place will be settled is not clear—it never is. The agenda in the other place is matter for the Lords; the Government have no control over it and no majority through which to press their will. The Bill remains with the other place, and I cannot clarify its intentions or the likely consequences for this House. All I can tell him is that the Government intend to make progress, one way or another.

Mr. Denzil Davies: With regard to the pre-Nice debate next Thursday, will my right hon. Friend give an assurance that the draft treaty of Nice will be available in the Vote Office well in advance of the debate, so that it can be examined and considered? Will she also try to ensure that the draft treaty, which is, in effect, a legislative document—the Nice summit will be legislating—is available outside the House, so that our constituents and the public can see it?

Mrs. Beckett: I freely confess that I am not sure whether it is possible to do that, but I shall draw my right hon. Friend's request to the attention of my right hon. Friend the Foreign Secretary, who, I am sure, will take it extremely seriously.

Mr. David Maclean: Will the right hon. Lady schedule an urgent debate on the cover-up being conducted by Government in respect of the exorbitant cost of preparations to join the euro? She will be aware that those costs are now estimated to be heading towards £38 billion, and that Ministers and Departments, especially the Department of Health, have instructed national health trusts throughout the country to refuse to answer legitimate questions put by Members of Parliament about the disgraceful costs being incurred by

the trusts, which are directing vital money away from patient care. Does the right hon. Lady agree that that is an urgent matter for an early debate?

Mrs. Beckett: No. It is absolute rubbish to suggest that money is being diverted away from patient care, just as it is rubbish to suggest that there are vast hidden costs.

Shona McIsaac: Has my right hon. Friend had a chance to access www.thisisgrimsby.co.uk? [Interruption.] if hon. Members like it, they can try the sister site, www.thisisscunthorpe.co.uk, the equally excellent site of my local newspapers. If my right hon. Friend has accessed the site, she will have noticed in Friday's edition that the first cheques for trawlermen's compensation have now gone out to those who fought for 25 years to win justice in that case.
In addition, my right hon. Friend will have noticed in Monday's edition pensioners warmly welcoming the winter fuel allowance and their free television licences; in Tuesday's edition that the Government have given consent for a new power station—that is 500 jobs; and in yesterday's edition £18.5 million extra for my local health authority. I leave the choice up to my right hon. Friend, but can she organise a debate on one of those issues, so that my residents know exactly what the Government have done for them and what the Tories would take away?

Mrs. Beckett: I am grateful to my hon. Friend for her remarks, and I warmly congratulate her on the zeal with which she has pursued the issue of trawlermen's compensation ever since she has been in the House, not least at business questions. She makes a valid point, offers us a range of items from which to choose, and identifies the fact that it took the return of a Labour Government for the trawlermen to get the compensation for which they have been fighting for so many years. I add to that my own list, which includes the far east prisoners of war who suffered, sadly, at the hands of the Japanese; the families with vaccine damage—[Interruption.] I know that Opposition Members do not want to hear any of this. Those people asked them for money for 18 years and got no answer except no. Deeply though I am tempted by my hon. Friend's list of excellent items to debate, I fear that I cannot offer to find special time, unless she tries Westminster Hall.

Mr. Peter Brooke: I think and certainly hope that the Leader of the House knows how much I genuinely respect her leadership of the House. Last Thursday, at column 534 of Hansard, I sought to summarise her views on free votes on the Liaison Committee report, with which her Parliamentary Secretary, winding up 10 minutes later, did not choose to find fault. If, as the Prime Minister intimated yesterday, I did misrepresent the right hon. Lady's views, I apologise to her. In a constructive vein, can she say how the matter will be taken forward in future?

Mrs. Beckett: I thank the right hon. Gentleman for his remarks. He is always courteous, not merely to me but to everybody in the House, and is recognised for that. I took no offence, and I do not immediately recall the precise words of his summary. I simply say to him that my view has always been that whenever a matter is put for decision


before the House, it is always on a free vote if it is a House matter. That is a simple statement of the position as it has been and remains. As to the issue of how we will take forward the proposals of the Liaison Committee, the right hon. Gentleman will know that the Government consider them to be of major importance and believe that they should be given more mature consideration. I cannot, I fear, tell him at present when we are likely to be able to take those proposals forward.

Mr. Steve McCabe: In view of the recent revelations that Ministers in the former Tory Government never had any intention of holding a proper competition for the site of the millennium exhibition, does my right hon. Friend agree that that is a little like buying a lottery ticket and discovering that the organisers did not hold a draw? That disgraceful behaviour cost the people of Birmingham £500,000, and has also cost money for people in Derby, Stratford and elsewhere. If a local council behaved in such a way, we would surcharge the guilty councillors. In my view, we should surcharge the guilty Conservative Members. Does my right hon. Friend agree that we need an early opportunity to debate the matter and get to the bottom of what happened?

Mrs. Beckett: My hon. Friend is entirely right to suggest that Derby, as well as Birmingham, will respond somewhat sorely to the information that is currently being published. If what is reported is true, it unfortunately tends to confirm the anxieties of most people in this country who live outside the metropolis. They believe that too many events are London centred, which causes resentment and suspicion on all occasions when there are such competitions. It is usually unfair to assume that there is not a free competition and that London is bound to win, but such stories raise people's anxieties. I fear that I cannot give my hon. Friend an undertaking to find an opportunity for a debate on the matter in the near future. However, as I said to other hon. Members, there will be extra opportunities for debate in Westminster Hall, if the House decides that on Monday, and I have little doubt that the matter will be raised again there or elsewhere.

Mr. Andrew Stunell: I draw to the attention of the Leader of the House the situation of a constituent of mine, who has twice been called to have a flu vaccination, but twice had that appointment cancelled. Is the right hon. Lady aware of the grave shortage of flu vaccine in many parts of the country, including Stockport, and will she ask the Secretary of State for Health to come to the House to make a statement on that severe crisis, which is hitting patients and costing lives?

Mrs. Beckett: I am aware that there have been problems with the availability of flu vaccine and that Ministers in the Department of Health have applied considerable pressure to ensure that those problems will be resolved. I was not aware that a particular difficulty had arisen in the hon. Gentleman's constituency, but I shall draw his remarks to the attention of my right hon. Friend the Secretary of State for Health.

Ms Julia Drown: Will my right hon. Friend arrange for an urgent debate on the new Criminal

Records Bureau? The Government rightly said that voluntary organisations that work with children and vulnerable adults should be able to check on volunteers. However, I am concerned about the proposal to charge voluntary organisations for such checks. I am not sure that that is consistent with the Government's effort to encourage volunteering, reduce bureaucracy and ensure consistency across Departments. Can we have an urgent debate on that issue before the bureau's details are finalised?

Mrs. Beckett: My hon. Friend makes an important point about an issue on which she has been campaigning. I am also aware that many hon. Members across the House are anxious for the system to work effectively and efficiently for the public's protection. I fear that I cannot offer her special time for an urgent debate, but I recommend to her, too, the availability of debating time in Westminster Hall.

Mr. Stephen Day: Will the right hon. Lady be kind enough to explain to the House why she and the Government find it necessary to apply a timetable motion to the Police (Northern Ireland) Bill? Many colleagues in the House want to express their grave dismay and concern at the effective destruction of one of the finest police forces that the United Kingdom has ever had. Will she explain why the Bill's title has not been altered more accurately to reflect its practical outcome? She might consider calling it "Betrayal of the RUC Bill".

Mrs. Beckett: First, I remind the hon. Gentleman that a supplemental allocation of time motion is involved—in other words, the House has already discussed and decided to have an allocation of time motion for that Bill. Secondly, he will be as aware as anyone that the Patten report is part of the peace process and part of the response to it. Everyone recognises what is in many ways the very fine record of the Royal Ulster Constabulary, but most people, at least, believe that if the peace process is to continue, to be established and to succeed, we also need a new approach to the police force in Northern Ireland.

Mrs. Alice Mahon: I am sure that my right hon. Friend is as horrified as the rest of us at the situation in Palestine, where more than 200 Palestinians, including many children, have been killed by Israeli security forces. This is clearly the most unequal of struggles: there are stones and a few guns on one side and guns, helicopter gunships and an army on the other.
Will the Leader of the House ask the Foreign Secretary for an urgent debate so that the House can express its concerns about events and we can hear the Government's position on a situation that some of us believe is escalating into a major tragedy? I say that as a friend and not an enemy of the state of Israel, which I have always supported.

Mrs. Beckett: My hon. Friend makes some very important and serious points, and she is right to remind the House that she does so as someone who has been a supporter of the state of Israel but is concerned at the deterioration of the position there. She will know that the Government have always played an active role in trying to promote the cause of peace in the middle east, and we tried to encourage the two sides to come together. She will


know, too, that we voted in favour of Security Council resolution 1322, which condemned the excessive use of force against Palestinians.
I assure my hon. Friend that the Government will do everything we can to continue to promote the cause of peace. However, I fear that I cannot undertake to find time for a special debate on the matter in the near future. Perhaps I could recommend the opportunities in Westminster Hall to her, as well.

Mr. David Curry: Will the Leader of the House seek, wherever possible, to give the House an indication of the statements due in the subsequent fortnight? We are about to have an urban White Paper, and every quango dealing with regeneration and every non-governmental organisation has had this date in its diary for at least a fortnight. It is humiliating to be telephoned by people who are not hon. Members and told the business that will take place in my own House, not having been told of it myself in this Chamber.
Will the Leader of the House say when the statement on the rural White Paper will be made? It was due to be made consecutively with the urban White Paper, but that will not now happen. It was pulled last Tuesday, when the Government seemed to think that they would be besieged by lorry drivers. Furthermore, are we to have a statement on the climate change conference, which the Deputy Prime Minister will be attending next week in The Hague?
Of course, there are statements that cannot be foreseen, but there are many issues on which the Government have long intended to make statements and that flow from Green or White Papers. There is no reason at all why we cannot be given proper notice of those statements.

Mrs. Beckett: The right hon. Gentleman was a senior Minister in the previous Government, and he will know as well as anyone else why Governments are always cautious about giving notice of particular statements. Events can change, and it can become necessary to delay some matters because it is necessary to deal with other matters earlier. The right hon. Gentleman said that it was always intended to take the rural and the urban White Papers together, but he is mistaken.

The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): I said that they are separate.

Mrs. Beckett: My right hon. Friend assures both me and the House that it was always intended that they would be dealt with separately.
I fear that I cannot give an indication of what statements are likely to be taken in the next couple of weeks. Although the Government have some issues in mind that we may wish to report to the House, we always have to reflect on the ebb and flow of business and determine what business the House can take. The main consideration is that we ensure that matters are properly reported to the House, and we endeavour to do that. I also remind the right hon. Gentleman that the Government have made substantially more statements to the House than our predecessors did.

Mr. Dennis Skinner: Is my right hon. Friend aware that in the 18 years during which the Tories

were in power, there was never a time when they gave advance notice of White Papers, statements or anything else? The answer to people like those toffee-nosed Tories is that they should come to work every day. If they would just come to work, they would find out.
Now that we have heard the welcome news about the trawlermen's compensation, the Japanese prisoners of war compensation and this month's winter heating payments—which the Tories would get rid of if they got half a chance—will my right hon. Friend tell the Department of Trade and Industry to get to grips with the compensation payments for miners who are suffering from chronic bronchitis, emphysema and vibration white finger? If my right hon. Friend the Minister for Energy and Competitiveness in Europe can deal with that and knock together the heads of those 230 solicitors who are holding up the money, she will not even have to make a statement.

Mrs. Beckett: I have great sympathy with my hon. Friend's remarks. He will know that no one is more conscious of the urgency of the case that he makes, or more concerned about the delays that have been occurring, than Ministers at the Department of Trade and Industry. He is right, too, to identify that there was no progress on any of those issues while the previous Government were in office. I can assure him that I shall again draw his remarks to the attention of my right. hon. and hon. Friends at the DTI. However, I know that they share his anxieties.

Mr. Simon Thomas: In the light of the decline in gross domestic product in the regions of England and its severe decline in Wales during the past three years under this Government, will the Leader of the House tell us when we might have an opportunity to debate the Government's regional policies and particularly the use of the regional fiscal instruments?

Mrs. Beckett: I am not sure that the hon. Gentleman's premise stands. My understanding is that GDP has grown under this Government—it must have done so, otherwise we would have a recession. Although a recession was much predicted by the Opposition, who were definitely disappointed that it did not arrive, we have not had one. However, I certainly understand his wish to debate issues of concern to his constituents. I recommend to him, too, the opportunities that arise—and may be increased—in Westminster Hall.

Mr. Paul Flynn: When can we debate the arrival of a unique, entirely unexpected phenomenon in Wales, which would not have happened under the previous Government? What has happened has no name as yet, but it could be described as nano-unemployment. An independent observer has said that we talked about full employment in the 1950s and 1960s, but now in Wales the level of employment is even higher because of the stable economy that the Government have created and the introduction of the minimum wage. Does not that provide a great opportunity for the hon. Member for Ceredigion (Mr. Thomas) and all other Opposition Members to recover from the terrible affliction that they suffer from whenever they talk about Wales—repetitive whingeing syndrome?

Mrs. Beckett: My hon. Friend makes a very powerful case. I am tempted to grant his request, especially as he is


right to say that not only in Wales, but across the United Kingdom we are seeing a return to levels of employment—and, indeed, to low levels of unemployment—of a kind that has not been seen in this country for 20 years or more. That is an achievement of which we can all be rightly proud. I fear, however, that he will not be surprised to learn that I cannot find time for an extra debate, but I know that he will take every opportunity to make his points in other ways.

Mr. Geoffrey Clifton-Brown: The Leader of the House will recall that at business questions on 21 March, I asked her about the cut-off time for tabling oral questions, as a result of which the Procedure Committee produced a report. Paragraph 17 of its summary states:
Taking these various factors into account, we have concluded that the deadline for tabling questions for oral answer should be moved from 5 pm to 6.30 pm on Mondays, Tuesdays, Wednesdays and Thursdays. We recommend that the Speaker should authorise such a change.
Will the right hon. Lady represent Back Benchers and find time for a debate, with a substantive vote, so that those changes can be put into effect? If she cannot find time for such a debate, will she have a private discussion with the Speaker, as I understand that implementation of the proposal requires no change to Standing Orders?

Mrs. Beckett: The hon. Gentleman is entirely right to say that that does not require a debate and vote. He will know how reluctant any Leader of the House is to try to find time for a debate that is unnecessary, given that we are unable to find time for so many necessary debates. Mr. Speaker will certainly have heard the hon. Gentleman's words, as I have, and I assure him that the matter will be considered.

Mr. John Cryer: Referring to a point raised earlier, we should have a full debate after the Nice summit because many of the proposals are causing widespread concern. Indeed, there should be a full debate on all the European treaties, as that would allow us to ask why the Tories gave up sovereignty in 1985, why they signed up to the single currency in 1992, and why, shortly afterwards, they followed that with the stability pact. I look forward to the contribution of the shadow Foreign Secretary, the right hon. Member for Horsham (Mr. Maude), because I am aching to know why he signed the Maastricht treaty in 1992.

Mrs. Beckett: My hon. Friend is entirely correct. We know that Conservative Members introduced VAT because they took us into the European Union, but such a debate would give us an opportunity to find out why they almost doubled VAT, why they increased it again to 17.5 per cent., and why they put VAT on fuel, although they now complain about the taxes on fuel. I share my hon. Friend's wish to air all those fascinating matters thoroughly in the Chamber, but I fear that I cannot find time for a special debate to do so.

Mr. Christopher Chope: Will the Leader of the House provide time to debate the implications for land use, planning and public services of the latest statistics from the Office for National Statistics,

which show that, in the last three years, there was net inward migration of 451,000 people—equivalent to the size of Portsmouth and Southampton combined and to more than half the population of Dorset? Major implications flow from that. The rate is twice the rate that prevailed over the past six years. Does the right hon. Lady agree that this is a serious issue that demands the House's attention?

Mrs. Beckett: I remind the hon. Gentleman that during the period to which he refers, there have been, for example, substantial upheavals in eastern Europe, the Baltic states and elsewhere, which have led to pressure on migration across the world. I am not aware of the figures that he gives. It was my understanding that, until relatively recently, there had been a net outflow, so it may be simply that we are seeing something of a redress of the balance. Of course these issues are taken into account by Governments of every shade as we see the ebb and flow of travel to and from particular countries.

Mr. Michael Clapham: My right hon. Friend will be aware that yesterday the EU gave approval for the Government to go ahead with its aid package to the deep coal mining industry—an industry that was so disastrously treated by the Conservative Government. That aid package is welcome in mining communities, but there are concerns about the early lifting of the gas consents and the need for investment in new clean coal technology. Will she find time for a full debate so that those issues can be aired when the regulation is debated?

Mrs. Beckett: I join my hon. Friend in his welcome for the agreement for the package of support. I understand that there will be concerns about the lifting of the gas consents—although my hon. Friend will know that these have been maintained now for a considerable time—and I recognise his concerns about the development of clean coal technology. I fear that I cannot find time for an additional debate on these matters, but I am confident that if my hon. Friend is fortunate enough to catch your eye, Mr. Speaker, he will be able to air some of the issues when we debate the scheme itself.

Mr. Stephen O'Brien: The Leader of the House will recall that yesterday I asked the Prime Minister about community health councils. I am delighted to find that one of her colleagues has already asked a question about that matter. In contrast to yesterday, however, Members on this side of the House are not stumped for a further question.
I met the health trusts in my constituency, which led me to want to campaign for community health councils. There is bitter opposition to their scrapping. They said that the costs that they were incurring to change over to the euro—without any decision being made in this country—had already outstripped the amount stated to me in an answer during the previous Department of Trade and Industry questions, when four of my colleagues asked questions and received inadequate answers. Should not the Leader of the House make time in this House for a complete answer from the Government, taking into account all the various departmental budgets for the cost


of the changeover to the euro? Would it not be appropriate for either the Prime Minister or the Chancellor to give answers to those questions?

Mrs. Beckett: I do not share the exaggerated claims for the costs of handling the euro which, after all, will be in circulation in this country—as it will be in the rest of Europe—whether Britain joins or not. In consequence, all sorts of organisations must prepare to deal with it. The notion that that will in some way impinge on health service provision in the hon. Gentleman's locality when his health authority received an increase of 8.4 per cent. in the announcements made the other day—I am surprised that he did not welcome that—cannot be borne out, even on the back of an argument about CHCs.
The hon. Gentleman said that he would ask his question even though somebody else has already asked it. I realise that I am risking the wrath of about 90 per cent. of the House in saying this, but women tend not to repeat something that has already been said; men never shirk from doing so.

Mr. Huw Edwards: In view of today's report from Professor Colin Talbot—which says that the Welsh economy is now better than it has been since the 1950s and 1960s, with zero unemployment in certain parts—could we have a debate on the Welsh economy? Does my right hon. Friend agree that such a debate would be of particular interest to the right hon. Member for Richmond, Yorks (Mr. Hague), the right hon. Member for Wokingham (Mr. Redwood), Lord Hunt, Lord Crickhowell and Lord Walker, who could all hear just how much better the Welsh economy is doing now that none of them is Secretary of State for Wales?

Mrs. Beckett: My hon. Friend makes a powerful point. I have seen reports of the work of Professor Talbot, and the picture is certainly encouraging. I share my hon. Friend's view that there are important lessons, not least for the right hon. Members for Richmond, Yorks (Mr. Hague) and for Wokingham (Mr. Redwood) to whom he referred. Great though the temptation is, I fear that I cannot find time for such a debate, especially at this time of year. However, may I warmly recommend Westminster Hall to my hon. Friend?

Urban White Paper

The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): The Government have today published a White Paper on the future of our towns and cities, which is accompanied by two documents, "The State of the English Cities" and "Living in Urban England: Attitudes and Aspirations". These set out the supporting analysis, copies of which have been placed in the Library. As we have said on several occasions, we will publish our rural White Paper later this month with the agreement of the business managers and yourself, Mr. Speaker. I always try to assist the House and the Opposition in giving what information I can, and I assume that, on this occasion, information might have been useful to help with the list of questions that was distributed by the Opposition Whip just before their spokesman came into the Chamber. We shall note with interest whether we get different questions at different times.
A common message runs through those documents, which are about people, places and prosperity. We want to create sustainable communities in which everyone, no matter where they live, can enjoy a good quality of life in communities in which economic prosperity and social justice go hand in hand. I am sure that the House will agree that we have some of the best towns and cities in the world. We have famous historical and cultural centres, dynamic commercial areas, pleasant suburbs and seats of learning that command respect the world over and of which we are justly proud.
The last urban White Paper was produced by the last Labour Government more than two decades ago and focused narrowly on inner-city areas. We now understand the need for a much broader approach that takes in all urban areas. Much has happened since that urban White Paper was published. Cities are powerful engines of growth, but in the early 1980s many of them were hit hard by economic changes. The approach then regarded economic behaviour as detached from its social context, and in the years that followed many areas suffered from neglect, poor management, inadequate public services, lack of investment and a culture of short-termism.
Our aim is to reverse that legacy of decline and bring about a lasting urban renaissance. There are signs of hope, as our attitudes and aspirations survey shows: 85 per cent. of people are satisfied with the areas where they live, the rate at which people are leaving our cities is slowing down and people are moving back into our city centres. We still face big challenges. People and jobs have been leaving our great cities, and people are increasingly living in smaller households or alone, with the result that many more households will need to be accommodated over the next 25 years, as the House has discussed.
Some neighbourhoods suffer from a poor quality of life and a lack of opportunity. Economic performance in some areas is weak, with a knock-on effect on the surrounding region. Over the past 20 years, out-of-town shopping centres have taken the heart out of some of our urban areas; 30,000 hectares of our green belt have been built over; and playing fields have been sold off for short-term profit without regard for the health of the communities they served.
On coming to office, we took immediate action to alleviate the worst problems and began laying the foundations for the long-term strategy that we are now bringing together in the White Paper. We merged the Department of Environment and the Department of Transport to encourage a more joined-up approach to solving problems. We have got hundreds of thousands of young people back into work with the new deal—[Interruption.] It is all very well the Opposition mumbling, but we have provided an extra £5 billion to tackle the £19 billion housing repair backlog that we inherited.
We produced the integrated transport White Paper and the £180 billion 10-year plan to rectify decades of under-investment in our transport infrastructure under the previous Administration. We began tackling problems in our most deprived communities through the £800 million new deal for communities and the social exclusion unit. We have committed £350 million over three years to regenerate the coalfield communities that were decimated by the previous Government's policies.
Modernising local government has been a priority. We have legislated to make councils more efficient and more accountable to local people. We established the regional development agencies to drive forward economic growth and regeneration in the regions—[Interruption]—and they are working. Many years ago, the Opposition said that they would abolish the regional development agencies for Scotland and Wales. They failed to do so. Although it was a manifesto promise, they did not carry it out. Why would they keep regional development agencies for Scotland and Wales and not give them to the English regions? We shall be asking them that at the next election.
We are modernising the planning system and have set a new target of building 60 per cent. of new housing on developed land. We are on target for achieving that. The quality of construction is improving, following John Egan's report, "Rethinking Construction". In 1998 we set up the urban taskforce under Lord Rogers to look at the causes of decline in our urban areas and recommend practical ways of bringing people back into our towns and cities. I would like to express my personal appreciation to Lord Rogers and his team for the excellent report on which much of the White Paper is based.
The White Paper builds on that groundwork. It sets out a long-term strategy that will bring lasting benefits to all who live in our towns and cities—a strategy which recognises, in Lord Rogers' words, that
people make cities, but cities make citizens.

Mr. Eric Forth: What does that mean?

Mr. Prescott: Think about it. Evidently, the Opposition have a limited knowledge of these concepts.
There are four key components to our strategy: improving quality of life through partnership with local people; developing sustainable communities in attractive, well-kept towns and cities; achieving economic growth and shared prosperity in all urban areas, and providing good-quality services.
The first is improving quality of life. In the White Paper, we commit ourselves to working in partnership with all concerned to make all areas places for people. It

is not just a matter of bricks and mortar. People need jobs, a decent home, good public services and an attractive and safe environment. To be successful, plans need to be shaped by local people for local people.
A clear message from regeneration projects over the past 20 years is that local people must be fully engaged from the outset. All too often, that has not happened—it certainly did not under the previous Administration.
Local authorities have a central role. A good council is one that listens to, leads and builds up local communities. We want councils to work through local strategic partnerships and to involve the community, service providers, business and voluntary organisations in producing community strategies. They should set out an action plan to improve their town or city as outlined in the White Paper.
Secondly, we want to develop sustainable communities living in attractive, well-kept towns and cities, which use space and buildings well and which are cleaner and less congested. Last week, my right hon. Friend the Chancellor announced a £1 billion tax incentive package to promote urban renaissance. As a result, more investment will be attracted to disadvantaged areas by the removal of stamp duty from all property transactions in those areas. A block of flats costing £250,000 could qualify for an extra incentive of £6,000.
The re-use of brownfield land will be encouraged through the provision of accelerated tax credits for cleaning up contaminated land. A company spending £1 million on cleaning up contaminated land could receive £300,000 without having to wait until the property is sold.
More homes will be provided as a result of the 100 per cent. capital allowances for creating flats over shops and VAT reforms to encourage the conversion of properties for residential use. For example, someone spending £20,000 on a conversion could receive an incentive of £2,500. It is an important consideration in the development of single-person households.
The new urban regeneration companies that we set up last year are beginning the process of transforming parts of Liverpool, east Manchester and Sheffield. We plan 12 more to tackle the hardest hit local areas in every region. One can often tell the health of an area by the quality of its public realm, and in particular its parks, play areas and open spaces. They are indeed, as they are often described, the lungs of our towns and cities. We have set up a comprehensive programme, including demonstration projects and an extended green flag award scheme—like the blue flag scheme for beaches—to encourage and recognise excellence.
Planning has a fundamental role to play. I can announce today that, in response to Lord Rogers's report, we will conduct a fundamental review of planning policy guidance note 1, "General Policy and Principles", to put the urban renaissance at the heart of the planning system. Simplifying compulsory purchase will make it quicker and easier to unlock land and fairer to everyone involved. There will be new guidance and, ultimately, legislation.
There is a shortage of people with the necessary range of skills to drive forward the urban renaissance. We are therefore setting up regional centres of excellence to improve skills and training in each region. The first two will be in the north-west and in London. In addition, we will start a programme of international secondments so that we can learn from the best in the world.
Our town centres will be stronger. We will protect them from new out-of-town schemes. We will improve them through the town improvement schemes, with local funding, as proposed in the local government finance Green Paper. The millennium communities at Greenwich and Allerton Bywater have shown what good design can achieve. The Greenwich millennium village will be an attractive, mixed tenure development, with homes within walking distance of shops, employment and services. It will have good open spaces and, above all, it will be environmentally sustainable, using 80 per cent. less energy and 30 per cent. less water than a similar conventional development. We will build five more millennium communities in different parts of the country.
Our new English cities fund is designed to encourage the maximum growth in private investment in priority areas, which is vital if we are to secure the widespread regeneration that we seek. The fund will bring up to £250 million into new mixed use projects.
The third component of our strategy is creating the conditions for economic growth and shared prosperity in all our towns and cities. We want to see the generation of more wealth and social justice side by side. Growing disparities and exclusion from our increasing national prosperity are simply unacceptable, and have dominated the past 10 years.
If towns and cities are to be successful economically, they need effective support and a clear regional lead. We have therefore given the regional development agencies more money and much more freedom to use those funds to best effect for the people of their region.
Access to investment capital is also vital to economic growth. That is why my right hon. Friend the Chancellor announced last week that we will consult on a new community investment tax credit to encourage private enterprise in under-invested communities. We will also work closely with the venture capital industry to set up the first community development venture fund to support new businesses in disadvantaged areas.
Although under this Government there are 1 million more people in jobs, there is a mismatch between the jobs that are available and the skills of those seeking work. We need to ensure that local people have the skills that businesses are seeking. We are therefore setting up the new Learning and Skills Council announced by my right hon. Friend the Secretary of State for Education and Employment, with a budget of £5.5 billion a year. That is an increase of £600 million. It will bring together funding for education and training to ensure a coherent approach that benefits both learners and employers. In this way, we hope to encourage lifelong learning and reduce the skills mismatch that exists in too many areas of our cities and towns.
Any efficient, modern city requires a good transport system. That is why the 10-year plan for transport emphasises improving bus services and commuter railways, and why it will fund up to 25 new light rail lines. There is a considerable amount of money for the local transport plans that we are to announce in December.
The fourth component of our strategy is good-quality services. By 2003–04 there will be £139 billion a year for key services: health, education, transport, housing and criminal justice, as well as culture, leisure and sport. That is £33 billion more than now. It amounts to an average

real increase of nearly 7 per cent. a year for the next three years, which is a substantial increase however it is measured.
The extra money will be backed by tough targets to ensure that we get substantial improvements, with the greatest change in the most deprived areas. We have set ourselves the target of making sure that all social housing is of a decent standard within 10 years, and we are providing the resources needed to make that possible.
Providing homes for key workers is essential if we are to have good-quality services in our major conurbations. We have allocated £250 million over the next three years to help key workers to buy homes. We will shortly set out the details, following on from the housing Green Paper.
We are raising educational standards by expanding the excellence in cities and sure start programmes, by extending free education for three-year-olds and by attracting more people into higher education through the excellence challenge. Only today, my right hon. Friend the Secretary of State for Education and Employment announced that performance in the first excellence in cities areas has improved much faster than anywhere else.
As my right hon. Friend the Secretary of State for Health made clear earlier this week, people's health should not depend on where they live. We are improving health services and reducing inequalities through a major expansion of investment in the health service. We have set tough targets for reducing crime and are backing that with an enhanced crime reduction programme, additional funding for the police and a 10-year drugs strategy.
We recognise that the most deprived areas need extra help and we are determined to narrow the gap between them and the rest of the country. That is why we have set up a neighbourhood renewal fund of £800 million and will shortly be setting our action plan for neighbourhood renewal.
There have been many attempts to change our towns and cities. Too often they have been partial and limited, looking at buildings or the economy in isolation and forgetting the people who live there. This White Paper is broad in its scope and long term in its perspective. We deal with towns and cities struggling to recover from decline as well as those where the pressure of growth needs to be carefully managed. We have set out the way to achieve this and provided the money to back it up.
However, no Government can deliver on their own. We will lead and enable regional and local partners to transform our towns and cities. We will get decisions taken at the right level and transfer real power from Whitehall to Whitechapel. Lord Rogers called for an urban policy board to track progress in implementing our proposals. We will put urban issues at the heart of Government by setting up a new Cabinet Committee. That Committee will be advised by a new group bringing together community, academic, professional, private and business interests.
The Government will be accountable. The Cabinet Committee will prepare for an urban summit in 2002 that will take stock of progress. We will also publish a new "State of the Cities" report in 2005.
I recently visited a deprived pre-war estate in my constituency. Most constituencies contain estates like it. There was graffiti, litter, empty houses and a general air of decay, but a very strong sense of community too. I met


a woman who had lived there all her life. She said, "I love living here, but I don't want to go on living like this, John." We must not fail people like her, her family or the community.
This White Paper sets out our long-term strategy. We cannot deliver on our own, so I am calling on local authorities, business planners and developers, voluntary and community groups and, above all, local people to work together to bring about an urban renaissance.
In short, this White Paper is about giving people more say over shaping their future, making sure that people can live in attractive and well-kept towns and cities, creating and sharing prosperity, and ensuring that we have places with good-quality services which meet people's needs.
I commend the White Paper to the House.

Mr. Archie Norman: I thank the Deputy Prime Minister for that statement, and for the advance copies of it that he supplied. I welcome him back to the Chamber after the recent important debates on the tube, the Transport Bill and other matters. Sometimes I think that we see him only when there is a glossy brochure to produce or a disaster to announce.

Mr. Phil Hope: Where were you?

Mr. Norman: I was here in the Chamber on Monday, as Labour Members well know.
The subject of the statement is a matter of commitment and passion that is shared by all parties. The failure of our inner cities over the past three decades or more has been the engine of poverty, deprivation and social failure. Inner cities account for 54 per cent. of crime in the country, and the figure is rising. They are the source of lost opportunity and are the root cause of children left behind by the prosperity enjoyed by the rest of the country.
I should like to join the Deputy Prime Minister in paying tribute to Lord Rogers, who has produced a formidable report on the subject. He has played a valiant role in the past year, lobbying and harassing the Government into producing the statement that we have heard today.
At last, three and a half years into a Labour Government, we have a White Paper. At first glance, we welcome the White Paper and many of its proposals. However, people will judge it not by its grandiose words, but by whether it accepts the hard recommendations made by Lord Rogers and addresses the fundamental criticisms that have been made of Government policy in the past.
The Financial Times said today that the Government were nervous about the reception of their White Paper. Is that surprising when, according to our first-cut tally of the White Paper, of the 105 recommendations made by the Rogers report only 14 have been met in full? Some 34 have been fudged or delayed and 57 are either not addressed in the White Paper or have been rejected outright. Many people living in our cities will think that a very disappointing tally—too little, too late. [Interruption.]

Mr. Speaker: Order. The Deputy Prime Minister had a proper hearing, and so should the Opposition spokesman.

Mr. Norman: Thank you, Mr. Speaker.
I ask the Deputy Prime Minister to address four fundamental points. First, the Government have been criticised in the past for their failure to co-ordinate the various initiatives on urban regeneration. The Select Committee on the Environment, Transport and Regional Affairs said:
There is a lack of co-ordination between local, regional and national Government…
The Committee also said that the Department of Trade and Industry and the Department of the Environment, Transport and the Regions do not appear to have the same views about the role of the cities. According to yesterday's reports in The Times, neither do they have the same views on the north/south divide. The Deputy Prime Minister does not think that it exists, but the Secretary of State for Trade and Industry thinks that it is widening. The Government's response has been to set up a Committee. Does the Deputy Prime Minister seriously think that that will be enough? Will the DTI and DETR regeneration budgets be merged under that Committee? Will the right hon. Gentleman chair that Cabinet Committee, or will it be left to the Minister for the dome? Will it meet regularly, or will it be like the Rural Affairs Committee, which has met only once this year?
The Government have been criticised for dissipating resources and applying Elastoplast solutions—for doing the easy things but neglecting the tough actions. What has happened to the primary legislation that Lord Rogers called for to strengthen the powers of regeneration companies? What has happened to the much vaunted urban priority areas which would have enabled more far-reaching and rapid delivery of change? Has the Deputy Prime Minister rejected these recommendations, which were fundamental to the Rogers report, or has he just been thwarted by the Treasury?
In the past three years, the Deputy Prime Minister has cut the amount of money spent on regeneration. Will he now clarify what—if anything—in today's announcement represents new money or new tax incentives? Or does it consist entirely of reheated announcements from the past? Has he been comprehensively pre-empted by the pre-Budget announcement?
The right hon. Gentleman mentioned a £1 billion tax package, already mentioned by the Chancellor last week. Is that not to be spread over five years, with only £163 million of it for next year?
More specifically, can the right hon. Gentleman tell us definitively his attitude to the zero VAT rating on new houses built on green fields? Has he rejected Lord Rogers' recommendation of levelling the playing field between urban regeneration and greenfield development, because the statement appears to be silent on that subject?
Does the Deputy Prime Minister recognise the growing concern, expressed by Lord Rogers, the Rowntree Foundation and many others, about the continuing exodus from our cities and about his commitment to accelerate that exodus by building 900,000 unwanted new homes in the south-east and 500,000 in the south-west? Does he not recognise that that is a plan that flies in the face of all that the statement is designed to achieve? It will accelerate the migration of the better-off and able from the inner cities to the countryside, and from the north to the south.
Finally, does the Deputy Prime Minister recognise that summits in 2002 and Cabinet Committees are all very well, but in six months' time when he retires from office


he will be judged not by his promises but by his record? By the time he retires, the hard facts will be that he will have spent less on regeneration in our inner cities than did the previous Conservative Government; and there will be 3,000 more homeless people than he inherited, 51 per cent. more people in bed-and-breakfast accommodation, 3,000 more empty council houses, and rising crime in almost every major city. Of all the new jobs that the Government claim to have created, only 10 per cent. will be in the inner cities. According to the Government's statistics, 300,000 more people are living below the poverty line and the exodus from our cities has accelerated, not declined—all that at a time of unprecedented prosperity.
Is not the real record one of rising poverty, a widening north/south divide and the neglect of our inner cities? Is not the real truth that this is a Government who have flunked the big decisions and masqueraded as the party of the inner cities, but have betrayed their own heartlands?

Mr. Prescott: That was a bantam weight contribution by the hon. Member for Tunbridge Wells (Mr. Norman). As for appearances in the House, I have an interesting note from the Library: I have appeared at oral questions four or five times more often than the hon. Gentleman since he has been on the Conservative Front Bench, and I have been here more—or at least an equal amount of time—for statements. So I am before the House more often than the hon. Gentleman. I have embarked on a secret strategy to improve the relationship between us, however: absence makes the heart grow fonder.
I welcome the hon. Gentleman's endorsement of the report and congratulations to Lord Rogers and his urban team, who have produced an important piece of work. I also welcome the noble Lord's support for the report, which he made clear on the "Today" programme, and for the new financial measures announced by my right hon. Friend the Chancellor. It was inevitable that I should have to wait for the Chancellor's announcement before the measures could be included in the White Paper—that is normal practice. The fact that I repeated the announcement does not make the measures irrelevant, as they are part of the package.
The big decision is that £180 billion will be going into the transport industry. We are often asked in the House, "Where are the resources?" I have catalogued all the billions of pounds that will be available to improve investment in the social structure in our cities and towns, which the previous Administration failed to provide. Admittedly, the hon. Gentleman was not responsible for the decisions of the previous Administration, but he was certainly a member of the Conservative party at the time, so I am surprised to hear any complaint from him. The Conservatives doubled homelessness, put an awful lot of people out of their homes because of negative equity, and at the same time held back £5 billion from the sale of council houses, refusing to invest it in new housing. We have released resources that the previous Administration deliberately kept in accounts while the quality of homes in our inner cities declined year on year—they simply would not put the money back in to improve houses. That was one of our first decisions. Our housing programme of the past three years compares favourably with any record of the previous Administration.
As to how many of Lord Rogers' recommendations have been accepted, a number have been implemented in part or fully and we disagreed with only six—I mentioned

one, which was the urban policy board. I shall take the evidence of Lord Rogers himself; on the "Today" programme, he made it clear that the White Paper is a powerful tool for the regeneration of our cities—

Mr. Tim Loughton: He has not seen it.

Mr. Prescott: No, he has not seen the White Paper—[Interruption.]

Mr. Speaker: Order. The hon. Member for East Worthing and Shoreham (Mr. Loughton) is not allowed to do that.

Mr. Prescott: I have catalogued all the matters covered by statements made in the House because we need a comprehensive approach. The White Paper aims to find a framework. Lord Rogers knows about the transport and housing plans; he knows what we intend to do about brownfield sites. Those matters are part and parcel of our approach to the regeneration of our cities, so it is right for him to say—he is also well aware of what my right hon. Friend the Chancellor said—that the White Paper is a powerful tool for the development and regeneration of our cities.
As for differences between the DETR and the DTI in the development of our policies, clearly there are none. Press reports are not necessarily to be taken as they are presented. I have read the speech given by my right hon. Friend the Secretary of State for Trade and Industry. It makes no statement whatever about differences between the north and south. My right hon. Friend referred to the economic differences in our cities; after 18 years under the previous Conservative Administration, that is hardly surprising. We are united. The White Paper is about uniting Departments to ensure that our towns and cities meet the requirements and make improvements.
As for the Tory record on regeneration, during their last year in office, the Tory Government cut back spending on regeneration to £1.3 billion. This year, we are spending £1.5 billion; we are increasing that by 15 per cent. a year for the next three years. The hon. Member for Tunbridge Wells wants to make a comparison, but he does not take into account the amount that we put into new deal programmes and the extra resources allocated for the inner cities. Those amounts need to be added in order to make comparisons about regeneration. When the hon. Gentleman makes that comparison, he will find that the resources that we are giving our towns and cities are substantially higher.
The White Paper brings together thinking across Government; it provides a framework for our towns and cities, and is what we intend to do to provide better opportunities.

Mr. Andrew F. Bennett: I congratulate my right hon. Friend on the White Paper. Will he pay tribute from the Dispatch Box to all those—local authorities, private companies and individuals—who have already demonstrated in many of our big cities such as Leeds, Manchester, Birmingham and Bristol that urban regeneration can be made a reality, that we can bring people back to the cities and that that movement has already started? Will he tell us, in setting out the signposts


for achieving the aims of the document, how soon we shall receive the new planning guidance that he mentioned?

Mr. Prescott: I welcome my hon. Friend's remarks, especially as he is the Chairman of the Environment Sub-Committee. I appreciate the help that the Committee has given us on this matter, particularly the recommendations in its reports; they were most useful when we were considering the White Paper.
I support his comments on urban regeneration; it is an important development. In fairness to the Opposition, some of the urban regeneration schemes started by the previous Administration have been of much benefit to our cities—but the programme is not limited to that. There are distinctive differences between us, but the regeneration programmes have been of considerable benefit; we want to build on the successes and deal with the weaknesses. The White Paper addresses that.

Mr. Don Foster: Like the hon. Member for Tunbridge Wells (Mr. Norman), I congratulate Lord Rogers. I welcome many of the initiatives in the White Paper, including, for example, improved support for home zones and measures to help walkers and cyclists.
However, my overall impression of the White Paper is that it has sound and fury but signifies not a lot. There seem to be many missed opportunities. For example, why is there no proposal for a greenfield development tax to boost developments on brownfield sites? Help with contaminated land is welcome, but does not go far enough.
Why is there no proposal to reduce VAT on work to bring back into use the scandalously large number—750,000—of empty homes? Why are there no real measures to simplify the plethora of regeneration schemes and budgets—so bewildering that much of the budgeted money does not even get spent?
Finally, I hope that the Deputy Prime Minister will at least agree that, without the full involvement of local people in urban renaissance, the White Paper will simply be a waste of paper.

Mr. Prescott: I am sorry, I did not hear the last part—I was too busy. Did I hear someone say waste of space? I heard the other soundbite, which was that the White Paper gave the overall impression of sound and fury and did not signify a lot; I always thought that that was a description of the Liberal party. There seems to be common accord between the two Front Benches on that point.
I believe that the VAT proposals are a step in the right direction, and that they are the direction in which most people want us to go. The Conservative spokesman also asked why we were not introducing VAT on greenfield sites. The Chancellor has made it clear, and we have made it clear, that these matters are under active consideration. We started with stamp duty. We are now into zero VAT and 5 per cent. VAT. These are justified incentives for people to begin to develop empty properties—and properties of the type in which many single-person households might wish to live. I think that we are taking a step in the right direction. I recognise that Lord Rogers

wanted more, and I recognise what the Liberal spokesman is saying, but the direction is right, the strategy is right and it is part of our development.

Mrs. Ann Cryer: I welcome all aspects of my right hon. Friend's excellent statement. I especially welcome his repeated commitment to ensure that 60 per cent. of new housing is built on developed land. Will it now be possible for local authorities radically to change existing UDPs? For example, could Bradford council—now Conservative controlled—if it so wished, restore the great swathe of land near Silsden in my constituency to green belt, instead of pushing for hundreds of houses on that site?

Mr. Prescott: I am grateful for that expression of support. We are committed to ensuring that 60 per cent. of new housing is built on brownfield land. We are now in the range of about 53 per cent., getting on for 54 per cent., and moving in the right direction. In addition, the planning changes that we have made will help us to move in the same direction. When I made the new announcement on PPG1, I had that very much in mind.
am never sure what figure the Opposition propose for new housing built on brownfield land. It was 50 per cent. at one stage, and they only achieved an average 45 per cent. over their time in government. Then it went from 60 per cent. to 70 per cent., and down to two thirds—and I am still not quite sure what it is.
Our policy is absolutely clear. We have said that our figure is 60 per cent. We are on target for it. We are changing the planning regulations to achieve that. That can play a major part in the south as well as the north, by recognising the density of buildings and houses per hectare; we are going to achieve that.
The UDPs can be, and are being, reviewed—PPG3, which my hon. Friend the Member for Keighley (Mrs. Cryer) mentioned, provides one way in which we are asking local authorities to review those plans.

Mr. Graham Brady: Some of the comments that the Deputy Prime Minister made at the opening of his statement are particularly welcome, drawing attention to the importance of playing fields, the importance of encouraging homes in cities and towns rather than outside them—in the countryside in particular—and the importance of keeping the green belt intact.
Trafford borough council is reviewing its unitary development plan and is contemplating development in the green belt and the building of 2,400 houses on farm land outside the Greater Manchester conurbation. It is also contemplating destroying playing fields in Bowdon in my constituency. While councils are reviewing their unitary development plans, as they are currently, will the Deputy Prime Minister inform them of the Government's view that that type of development in green spaces outside towns and cities should be stopped, that the green belt should be protected and that playing fields should not be built on?

Mr. Prescott: I am grateful for the hon. Gentleman's comments about the importance of play areas or green spaces—or public realms, as they are often called. They are important, and we should all—local authorities and


national Government—give great importance to them. I am bound to say that the previous Administration's record is none too good. They got rid of 5,000 play spaces. Since we have restricted such development, we have received 856 applications to build on playing fields, and only six have been implemented against the agreement of Sport England. So we have considerably reduced such development and we have retained the playing fields and green spaces that the hon. Gentleman wants.
We have recommended in PPG3 that unitary development plans make it clear that building on such greenfield sites is not acceptable. As the hon. Gentleman knows, we make recommendations, and if a case comes to me for a planning decision, I have to take such advice into account.

Miss Anne McIntosh: I welcome the Deputy Prime Minister's statement, but will he help the House by providing a simple definition of a town, as opposed to a city? Will he pay regard to the evidence that will appear in the Environment, Transport and Regional Affairs Committee's response to the White Paper following a visit by its members to Thirsk and Boroughbridge? When will PPG25 be adopted and come into effect?
The White Paper refers to the learning and skills councils, so will the Deputy Prime Minister tell us who will be responsible for implementing the Investors in People programme locally?
I very much welcome the target for reducing accidents on our roads. Will the right hon. Gentleman increase the number of bypasses that will be built?

Mr. Prescott: One of the advantages of the list of questions that is distributed to Conservative Members is that it gives them the opportunity to repeat many questions—but I am sure that I will be in trouble with you, Mr. Speaker, if I give crib answers to crib questions. [Interruption.] The hon. Lady knows exactly what I mean.
As for the hon. Lady's first question, a city is a town that has been incorporated. There will be an announcement on that subject shortly, as many towns have applied to become cities. York is already a city, and, in my area, Hull is a city. There is a serious distinction between cities and towns and we are dealing with the definition. The rural White Paper will contain a definition of market towns, and we shall say something about that when it is eventually published.
We have provided for an increased number of bypasses. It is interesting that when I announced £180 billion for transport programmes, many Tory Members queued up to tell me about the need for bypasses. However, as they want cuts in public expenditure, I thought that they might want to forgo the building of bypasses in their areas. That would certainly happen if the £16 billion of cuts in the Conservative party's public expenditure programme were ever implemented.
PPG25 deals with flood plains, which are a matter of serious consideration. The hon. Lady will know that the previous Administration had a code of practice that did not mean a great deal. Many houses were planned on flood plains, and those plans were endorsed by both central and local government. We thought that that was wrong, and after the floods in 1998, I ordered a review.
We had hoped to publish PPG25 in December, but the House will accept that I want to learn from some of the problems that have occurred recently, and to take them into account. That should not delay things a great deal, so I hope that PPG25 will be published either at the end of this year or at the beginning of next year.

Mr. Bruce George: Did my right hon. Friend hear what I heard a few minutes ago when the hon. Member for Tunbridge Wells (Mr. Norman) talked about a period of unprecedented prosperity? Would my right hon. Friend be gracious and thank the hon. Gentleman for his sophisticated analysis of what has happened in the past three years? Perhaps my right hon. Friend can also persuade him to use what influence he has to reopen the Asda store in Darlaston, which was closed in the week of the general election. That was a malevolent decision.
Many people will welcome my right hon. Friend's announcement. Will he kindly arrange for a courier to be sent to Bovis forthwith with a copy of the report and all the planning guidance, and ask it not to build 700 homes on a greenbelt site in my constituency? Perhaps he will arrange to look in his pigeonhole, where a letter may arrive from me asking for that application to be called in by his Department when it is submitted.

Mr. Prescott: I thank my hon. Friend for his welcome words, which were no doubt addressed to the hon. Member for Tunbridge Wells (Mr. Norman), who was simply recognising the fact, which everyone else in the country knows, that in the past three years we have had unprecedented prosperity and economic growth. I am sure that we will have a chance to argue that in the coming months.
I cannot comment on Asda; that is a matter for the hon. Member for Tunbridge Wells. I assume that he no longer has anything to do with Asda—or, indeed, Railtrack—but no doubt he can bring considerable experience of those companies to his present job.
I congratulate my hon. Friend on the new Walsall art gallery, which is a good-quality and well-designed building in the public realm.
As for whether I should send a copy of the report to Bovis, a copy will be sent to anyone who wishes to have one and to make a contribution. As for building 700 homes in the green belt, my hon. Friend knows that I have a planning function and role, and it would be more than my life is worth to comment on that now.

Mr. Gordon Prentice: My right hon. Friend set a target for all social housing to be brought up to a decent standard within 10 years. That is excellent, but what about the private sector? One in five houses in east Lancashire is deemed to be unfit for living in, and 99 per cent. of those are in the private sector. More of our housing stock was built before 1919 than in any other area, and that housing is in a dreadful, deplorable condition. Is any special help being targeted on east Lancashire, because its unique housing problems can be addressed only with additional central Government cash?

Mr. Prescott: I am aware—I have just received advice to confirm this—of the difficulties in my hon. Friend's constituency, and the rest of east Lancashire, with regard to home renewal programmes. The housing finance Green


Paper attempted to introduce more flexible financial arrangements, which we hope will offer an opportunity for action. Of course, the taxation arrangements announced by the Chancellor will help with some private accommodation, but not necessarily in east Lancashire. I shall consider the matter and, if there is anything to add, write to my hon. Friend.

Sir Sydney Chapman: The Deputy Prime Minister will know that there has been great concern about the length of time between the publication of the urban taskforce report by Lord Rogers and the White Paper. Some of us will look carefully at how the White Paper responds to the report. In view of the importance of regeneration, do the Government intend to appoint a sole Minister to oversee regeneration in its entirety, and if necessary to take decisions when there are—albeit understandable—differences between one Department and another?

Mr. Prescott: It is a bit rich for the Opposition to ask why it has taken so long to produce the report by Lord Rogers and the urban development taskforce. During the past 20 years, when many of our cities were in considerable decline, there was no report, no statement and no commissioning of anyone to do anything. I think that the hon. Gentleman was a Whip in the Conservative Government, and perhaps that meant being quiet. I accept that he might not have been able to say much from the Back Benches, but he could have said something to the Government. That would have added some credit to his criticism.
Nevertheless, we established Lord Rogers' taskforce in 1998 and he produced an excellent report. We have responded to that and to the Select Committee on such matters. We have made a comprehensive statement on urban regeneration in the next decade or so. When the rural White Paper is published, another statement will be made. The previous Government made no statement on either of those issues.

Mr. George Mudie: I thank the Deputy Prime Minister for the compliments that the White Paper pays to Leeds, and congratulate him on the pledge to improve all social housing within 10 years, and on the provision of resources to carry out that pledge. However, may I draw his attention to the fear prevalent among local government colleagues, that that pledge is aimed only at local authorities that get rid of their stock? Will he assure our local government colleagues that it applies to all local government, regardless of the ownership of the housing stock?

Mr. Prescott: I understand my hon. Friend's point about social housing. We have given a commitment that will apply for 10 years. The specific circumstances to which he refers relate to local authorities and conditions concerning the transfer of properties. I made it clear in a previous statement that arm's-length companies could be established so that local authorities could retain ownership and have access to private capital. That means public-private partnerships, which I have been advocating in other less controversial areas.

Mr. Tom King: May I remind the Deputy Prime Minister that, contrary to the answer he gave my

hon. Friend the Member for Chipping Barnet (Sir S. Chapman), he paid tribute earlier to some of the initiatives that were launched by the Conservative Government, in which I had a modest involvement, nearly 20 years ago? As my hon. Friend said, the need for urban policy initiatives should be supported by right hon. and hon. Members on both sides of the House.
I was impressed both by the quality of Lord Rogers' report and the speed with which he produced it. I believe that I am right in saying that it has taken the Government considerably longer to respond with a White Paper than it took Lord Rogers to produce his recommendations. I am concerned that the right hon. Gentleman's statement seems to include many announcements that various matters will be reviewed. That does not reflect the urgency that some might think is needed.
The right hon. Gentleman talks continually of towns and cities. I welcome that, but one change has taken place since I had some responsibilities for these matters. Many of the problems of major cities now also face market towns and other towns throughout the country, and they, too, need attention.

Mr. Prescott: I think that I am right to say, as the right hon. Gentleman has said, that I wanted to give credit to the regeneration projects that were implemented in a number of cities, even when the previous Administration were in power. I have said that those were improving city centres. The right hon. Gentleman was much involved in that policy. My disagreement with him was that much of the previous Government's policy related to economic circumstances and did not take account of social investment. I am trying to say in the White Paper that there is a need to do more than focus on economic circumstances. A study that we put in the Library makes the point that what characterised the 1960s and 1970s, and went on into the 1980s, was the idea that we should deal only with the economic problems. However, the investment that we put into education, housing and communities is connected. In many instances, cities were denied the possibility of jobs. The regeneration process was good, but they did not benefit from it.
We are taking the arguments forward from the Labour party's inner-city policies, and beyond what the right hon. Gentleman developed under the previous Administration. The Conservative Government did not produce a document or an analysis to which to work. [Interruption.] There was no White Paper; we have produced the first one on these matters for the past 20-odd years. We are saying that all the parts should be put together.
I am grateful to the right hon. Gentleman for what he said about Lord Rogers and his recommendations. We could not simply accept the report and write it into a White Paper; there has to be consultation. We have received good advice from Lord Rogers, but if the Government are to adopt it we must start a process of consultation. It would be nice to say, "I don't need to consult because I've put the report into the White Paper", but the House would not be very happy with that sort of approach, and rightly so. There will be a time difference.
The White Paper is more comprehensive than Lord Rogers' approach. If a Government receive a recommendation from an outside body that something should be done about tax, the right hon. Gentleman will know that there will be lengthy discussions and


negotiations. I think that we can agree that the White Paper is more comprehensive than Lord Rogers' report, and that it is a move in the right direction. It builds on some of the successes to which the right hon. Gentleman referred, but takes things much further.

Maria Eagle: I welcome my right hon. Friend's statement as a representation of an on-going commitment to improving inner city areas such as the one that I represent in Liverpool. I advise him not to listen too much to the hon. Member for Tunbridge Wells (Mr. Norman), who on a recent visit to Liverpool indicated the extent of his knowledge of inner-city regeneration when he said that as he drove through Toxteth he had wound up his car windows. Does my right hon. Friend agree that the regional development agencies are key institutions for ensuring that the regeneration that is taking place is sustained? Will he say something about the hon. Gentleman's policy, which is to abolish them?

Mr. Prescott: I shall leave interpretation of the Opposition spokesman's visit to Liverpool, and what he said there, to others. Presumably, he noticed that the tower blocks have been knocked down there. I think that that is the one initiative that he advocates for regeneration—to knock down 10 tower blocks in five years. As there are 1,600 of them, I assume that he has an 80-year programme. It is an exciting initiative, but it will take a little longer to implement than some others.
The Opposition's policy on the regional development agencies is inadequate to meet the need. I believe that the agencies are a powerful force for development in the regions. They have been effective in Scotland and in Wales, and they have many supporters, including the CBI and many Tory councils, that want to see the agencies remain so that they can help to develop their regional economies. I think that as before, we shall see the Tories change their minds. It will be another bandwagon the Tories will jump on.

Mr. David Curry: Has the Deputy Prime Minister lost his battle with the Treasury to impose VAT, albeit at a low rate, on greenfield development, as well as giving concessions on VAT in city centres? Will he revisit the proposal of the Minister for Housing and Planning in the housing Green Paper to limit rent increases to RPI plus zero, which threatens to dislocate the development programmes of housing associations, which are so important in inner cities? Does he still accept the words of the Minister for Trade when he took the Regional Development Agencies Act 1998 through the House—that the Government would be judged on their success in narrowing the GDP gap between the regions? Is that still valid?

Mr. Prescott: The right hon. Gentleman was a Minister in a Government who implemented many of the proposals that he wants to see changed. It was a Conservative Government who introduced VAT to the UK and created the problems to which he is referring. He had no success in his attempts to secure a reduction in VAT, and failed totally with the Treasury.
As for VAT payments and tax changes, an exemption will be introduced so that no stamp duty will be paid on property transactions in disadvantaged communities. There is the 100 per cent. capital allowance for flats over

shops, which had been called for for a long time, even during the term of office of the previous Administration. There is a package of VAT reforms to encourage additional conversions of properties for residential use. I think that the right hon. Gentleman has expressed favourable views on those initiatives.

Mr. Curry: indicated assent.

Mr. Prescott: But he failed to convince the Treasury that VAT should be reduced, and it seems that I have been more successful. I am glad about that. Properties will be improved, and where he failed, I have succeeded.

Mr. Clive Efford: I congratulate my right hon. Friend on being a member of a Government who have, in the words of the hon. Member for Tunbridge Wells (Mr. Norman), brought about "unprecedented prosperity". I also congratulate him on the White Paper, especially with regard to the improvement of social housing. However, I shall express one concern. Some of the financial packages that have been put together to bring about improvements in social housing have led to stock transfer or to new build with registered social landlords. I am concerned about the long-term impact on the level of rents, especially re-let rents, for people who are transferred with some rights of tenure. Rents may no longer be affordable. We should pay some attention to that in the context of the White Paper and the future housing Green Paper.

Mr. Prescott: Whether social housing is in the public or the private sector, people want decent housing. We are working in both areas. As for stock transfers, my hon. Friend knows that we are trying to give local authorities more choice. I announced that in the Green Paper. My hon. Friend raises a legitimate concern, which most of us are aware of, about the level of rents. That will arise especially in the London area, given its special difficulties and the social transfer arguments.
The Green Paper makes it clear—consultation is taking place—that we must have an affordable rent structure. My hon. Friend will know that housing finance is an important factor, along with the benefits and supports that are provided. We are taking those matters into account in our comprehensive review.

Mr. Peter Brooke: Given that the Government's rough sleeper targets are proving far harder to achieve in London than elsewhere, may we have an assurance that London's complex and intractable problems will receive special attention, especially as London's wealth-producing engine does so much for the rest of the nation's economy? Finally, on a narrow but important point, will key workers in London include postmen?

Mr. Prescott: The right hon. Gentleman takes an interest in rough sleepers and often asks questions about them, so I think that he knows that we have reduced rough sleeping by 30 per cent. We still have more to do, but we have had some success.
As for categories of key workers, we have already had bids from teachers and postal workers, but it is for local authorities to judge those matters, as the key sectors in which there are shortages vary from area to area. However, we are providing resources and advice. I am


sure that the House welcomes the £250 million that we are providing as a step in the right direction in dealing with the problem.

Joan Ruddock: I congratulate my right hon. Friend on his pledge to put urban renaissance at the heart of planning. Will he meet the needs of my constituents by ensuring that the green spaces and play areas he mentioned are integrated into new housing developments on brownfield sites, not placed at a distance where security is a problem? Notwithstanding his comments about small households being the norm nationally, will he bear in mind that in constituencies such as mine, where there is a young multi-ethnic community, there is still a need for larger units to accommodate larger households and alleviate overcrowding?

Mr. Prescott: I agree with my hon. Friend. She reminds me of my recent visit to Peckham, where a big building had been knocked down and the resulting space integrated into a new community. I was delighted to read in The Guardian the other day that Peckham library, with its wonderful design and architecture, had received an international award. I am pleased to see the local community and individuals beginning to rule their own lives and make decisions about their community. That is exactly what I want to see developing in other inner-city areas, and the White Paper will ensure that the powers and resources needed are available. In addition, PPG1 will make it clear that the public realm is an essential part of the urban renaissance. The White Paper will assist local authorities to achieve that.

Mr. Crispin Blunt: I can find no mention in the White Paper and the Deputy Prime Minister's statement of the greatest disaster to overcome urban regeneration—the European Union ruling that gap funding was illegal. Is it not the case that the £250 million a year over five years announced by the Chancellor of the Exchequer, and the additional funding previously given to regional development agencies, will not nearly make up for the sums that would otherwise have gone into urban regeneration?

Mr. Prescott: I do not agree. However, any state aid or assistance as defined by the European Community is a serious matter. We have compensated regional development agencies and English Partnerships to deal with the difficulty. Ultimately, we are confident that the resources that we have announced will be able to go into all our proposals.

Mr. Vernon Coaker: I congratulate my right hon. Friend on the White Paper. Will he take care to ensure that the urban renaissance takes in the entire urban area? My constituency, which falls outside the city council boundary, often misses out on urban regeneration grants. Will my right hon. Friend ensure that urban renaissance applies to the whole of the urban area and not only to the areas defined by city council boundaries?

Mr. Prescott: My hon. Friend makes an important point about boundaries, and about where urban areas, inner cities and suburbs begin and end. That is a real

problem and one that is different in every area. We face the problem everywhere, in towns, cities, suburbs, market towns, rural areas and villages. In the main, economic regeneration tends to take place in the centre—usually, the city—but there is an obligation under planning requirements to ensure that all areas share in the prosperity. In PPG1, we shall emphasise that the overall, comprehensive approach is needed in respect of planning and development.

Mr. Andrew Robathan: I, too, welcome much of the White Paper, the intentions behind it and its recommendations in respect of inner-city housing. However, how does the right hon. Gentleman reconcile his fine words about the availability of inner-city housing with his continuing and unnecessary beneficial tenancy of an inner-city flat provided by a transport union, which is clearly contrary to paragraph 113 of the ministerial code of conduct?

Mr. Prescott: That is clearly not comparable.

Mr. Andrew Miller: Listening to some of the questions put by Opposition Members, one might have thought that nothing had happened in the past three years, even though paragraph 7.6 of the White Paper lists a dozen major initiatives that have an impact on urban areas. The Government should be congratulated on delivering those programmes. However, paragraph 7.3 states that
One of the strongest lessons from the past is that policies and programmes need to be comprehensive and tailored to the circumstance.
The initiatives listed demonstrate that the Government have delivered on a cross-departmental, comprehensive basis. Will my right hon. Friend ensure that no rules or regulations stand in the way of local communities acting on an equally cross-departmental basis?

Mr. Prescott: That is an important point. One of the purposes of the White Paper is to bring together all the different initiatives. I could have waited three years, carried out an analysis and then produced the White Paper, but the problems were so clear that we developed different policies relevant to the framework set out in the White Paper. It is fair to say that many of the things mentioned in the White Paper are policies that have already been announced in the House by the Secretaries of State for other Departments. What I have done is ensure that they come together within the White Paper framework. I shall certainly try to ensure that the policy we want to prevail in Government also applies in local authority areas. We want decision making on community and local strategies to involve not only local authorities but all community bodies, including those involved in housing, education, health and so on.

Dr. Alan Whitehead: I, too, welcome the White Paper, which represents a considered, rounded approach, in stark contrast to the solutions for simpletons that we have recently been hearing from Opposition Members. Does my right hon. Friend consider that the transport requirements for effective urban regeneration can properly be applied within the


requirements of transport policy in an urban area generally, as opposed to within a specific local authority area?

Mr. Prescott: That is a detailed and important point. Local transport plans should be relevant to the development of the urban area. However, the essential point, which will also have to be addressed in the rural White Paper, is that people should be able to move between the areas in which they live and work, inside and outside city boundaries. Those whose task it is to follow the advice set out in the White Paper face the important challenge to adopt a comprehensive approach, and we have provided the resources for them to do so. People in Southampton have been considering a solution using light railways, which would not be limited to Southampton's immediate area. Local authorities and local people make their decisions through the local transport plan, but such plans should not be confined to inner-city areas.

Mr. David Lepper: As Member of Parliament for one of the areas that have applied for city status, may I tell my right hon. Friend with what eager anticipation we in Brighton and Hove await the announcement to which he referred? Brighton town centre has benefited from having a town centre manager, and I know that my right hon. Friend is aware that the all-party group on town centre management issues, which I have the pleasure to chair, commands considerable cross-party support. What role does he envisage for town centre management schemes in realising the aims of the White Paper? What proposals does the White Paper contain on sustainable funding for town centre management schemes?

Mr. Prescott: My hon. Friend will realise that which areas will be granted city status is a great secret. It is a matter for the Home Office. I do not know what the

outcome will be and I am not involved in the decision, although I do, of course, read the bids and hear from Members of Parliament who lobby me on the subject. We must wait for the announcement.
With regard to the Association of Town Centre Management, many of its proposals are for the sort of schemes that we endorse in the White Paper. Much can be done in the public realm—for example, by improving transport—to develop our town centres. We have set out such plans, and the various funds available are sustainable. We plan funds for local authorities over a three-year period to enable them to plan ahead. It should be possible to provide the resources to improve our town centres, and I welcome the work done by the association.

Mr. Peter L. Pike: I accept the White Paper, but does my right hon. Friend agree that further thought should be given to ways of helping councils such as Burnley, which has 3,500 empty houses in the private sector? Demolition is extremely expensive, and there is little site value once those properties are demolished.

Mr. Prescott: My hon. Friend makes the point that I made to my hon. Friend the Member for Pendle (Mr. Prentice). The renewal of private properties is a particularly difficult problem, which my hon. Friend the Member for Burnley (Mr. Pike) has raised with me three or four times. I give him the same response as I gave to my hon. Friend the Member for Pendle: I will write to him and consider how we can assist further in dealing with that problem.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Michael Lord): Order. I am sure that we shall return to these matters in the future, but now we must move on.

Orders of the Day — Insolvency Bill [Lords]

As amended in the Standing Committee, considered.

New Clause 1

PROHIBITION DURING PERIOD OF DISQUALIFICATION

'. A person subject to a disqualification order or undertaking under the Company Directors Disqualification Act 1986 shall not act as the principal of any trade or business providing services to consumers during the period of disqualification unless so authorised by the Director General of Fair Trading.'.—[Mr. Chope.]

Brought up, and read the First time.

Mr. Christopher Chope: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael Lord): With this it will be convenient to discuss the following: New clause 2—Disqualification orders: unfitness of director—

'. After section 3 of the Company Directors Disqualification Act 1986 there is inserted the following new section—

Disqualification orders: unfitness of director

.—(1) The court may make a disqualification order against a person where it appears to it—

(a) that he has been a director of a company which was struck off the register of companies by reason of its failure to deliver company accounts, and
(b) that his conduct as a director of that company makes him unfit to be concerned in the management of a company.

(2) The maximum period of disqualification under this section is five years.".'.

Amendment No. 14, in clause 6, page 4, line 26, at end insert—
'(5) Before accepting a disqualification undertaking under this Act the Secretary of State shall prepare a summary statement of the outcome of the relevant investigation.
(6) The summary statement prepared under subsection (5) above shall be a matter of public record.'.

Amendment No. 22, in page 5, line 5, at end insert—
'(1A) The Court shall only grant an application under subsection (1) above if it is satisfied that there has been a material change of circumstances since the giving of the disqualification undertaking on the part of the person who is subject to the disqualification undertaking.'.

Mr. Chope: New clause 1 would prevent disqualified company directors from setting up and running unincorporated businesses during the period of their disqualification, unless they had obtained the authority of the Director General of Fair Trading.
The new clause evolved from a useful debate that we had in Committee during the fourth sitting on 7 November, when I moved what was originally amendment No. 1 to clause 5.
There was universal sympathy and support for my amendment in Committee. The Minister said:
I have a great deal of sympathy with the hon. Member for Christchurch, as the problem of rogue traders is serious.

He said that he would be disappointed if, as pundits predict, there was no Department of Trade and Industry Bill in the Queen's Speech, and he said that he and the Government wanted to clamp down on rogue traders, but that my proposal was "not the appropriate vehicle".
In my experience, that form of words is the last desperate line of defence of a Minister who concedes the argument, but has been told by his officials that he cannot agree to the change.

Mr. Eric Forth: My hon. Friend must be aware that there may well be a general election in the first half of next year. Were that to be so, even if there were a Bill in the Queen's Speech, does my hon. Friend agree that it is most unlikely that it would reach the statute book? If something is not done now—today—we may face a period of two years before it is possible to deal with the matter.

Mr. Chope: My right hon. Friend is right. Throughout their term of office, the Government have said that they would legislate on rogue traders and introduce legislation to protect consumers. There is every prospect that this Parliament will be concluded before they have done anything effective on that front. The modest measure contained in new clause 1 would enable the Minister to go to the people at the next general election and say, "I delivered in part. I was not able to deliver the whole, but I delivered in part."
To develop the Minister's metaphor in Committee that my amendment was not the appropriate vehicle, if Parliament misses this bus, when will the next one come along? That is the point made by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth).
The Minister told the Committee:
Legislation will be properly framed to undertake the tasks that the hon. Gentleman has identified, one of which will be enacted in the new year—[Official Report, Standing Committee B, 7 November 2000; c. 105.]
He then referred to the injunctions directive. I do not know whether my right hon. Friend is familiar with that, but if not, he soon will be. The Minister undertook, among other matters, to send all members of the Committee a note about that directive.
In accordance with that undertaking, the Minister duly sent us such a note. As a result of reading it, I have modified the argument that I advanced in Committee. The new clause would make the Director General of Fair Trading the key person who could allow a disqualified rogue director to set up as the principal of an unincorporated business. It also makes the measure less absolute than that proposed in Committee and integrates it into the injunctions directive.
The injunctions directive is to be implemented in the United Kingdom by regulations. It is clear from the Minister's note that the European Union expects us to introduce that directive so that it has effect before 1 January 2001. That target will be missed by the Government, but in paragraph 6 of the note that the Minister kindly provided, he stated:
The implementation regulations will designate the Director General of Fair Trading as the lead independent public body who will he empowered to obtain cease and desist orders in respect of all the legislation covered.


It is worth noting that the injunctions directive will be far more limited in application than the issue of rogue traders. The Minister gave us a list of other European directives and areas where the injunctions directive would apply, but from my reading of that list, I do not believe that it would deal with the situation that I recounted to the Committee, involving a person in my constituency, Mr. Gary Turley, who runs a business called Be-Secure Windows. He has been going round to various of my constituents, offering to carry out works on their house and demanding large cash sums up front so that he can buy the windows and other goods and materials. The House will not be surprised to hear that having done that, he never provides the windows or does the work. As a result, he is a good example of a rogue trader. He is ripping off people in my constituency and the surrounding area.
I do not know whether Mr. Turley was ever the director of a company, but if he behaved in such a way as a director of a company and he was disqualified as a director of that company, under my new clause he would automatically not be able to carry on business as an unincorporated trader. If the new clause were implemented, it would catch quite a large number, although not all, of rogue traders.
The last desperate argument that the Minister may deploy, as he did in Committee, is that new clause 1 would be piecemeal legislation. In that case, as I said in Committee, the new clause should fit in well with the Bill, which is made up of piecemeal legislation.
New clause 2 is even more important than new clause 1. It would fill a serious loophole in the current law as it affects the accountability of company directors. It builds on a full debate that we had in Committee. The best way of explaining the matter to the House is to give an example of how the gap in the law came to my notice, and the gravity of what was exposed by that experience.
A limited company can be established, it can trade and solicit subscriptions and donations, but after it has achieved its objectives, it can disappear without ever having to file accounts and without the public ever acquiring information about the remuneration of its directors or the value of their shareholdings.
Provided that no creditor is dissatisfied, the authorities in general and Companies House in particular have no penalty or sanction to use against the directors. Such sanctions as are available apply to persistent failure to file accounts. A company may be set up in the knowledge that it will trade and remunerate directors with large sums of money. If it dissolves as a result of a failure to produce accounts, the people who are eager to find out what those accounts might reveal—including the remuneration of directors—will be unable to gain access to that information.
That serious loophole in company law came to my attention two years ago when I inquired about a company called People's Trust Ltd. Some hon. Members may recall that that company was set up in January 1997 with the avowed aim of championing higher standards in public life. However, the records show that it failed to fulfil its obligations under the Companies Acts at the first hurdle: it failed to file its accounts. Two reminders were sent in 1998 and a notice was then placed in the London Gazette—all with no response. People's Trust Ltd. was then struck off the register for failing to file its accounts.

It was thereby dissolved and unable to trade legally as a company with effect from the beginning of September 1998.
The founding chairman and main source of funds of that company—to the extent of at least £1 million—is well known to officials at the Department of Trade and Industry and to hon. Members: it is none other than Mr. Fayed. When challenged by The Independent about the failure to file accounts, a spokesman for Mr. Fayed said:
It appears that there has been an administrative oversight on the part of our legal representatives. That being the case, we will look to rectify this on Monday morning.
It will not surprise hon. Members to hear that nothing at all was rectified. Indeed, that was the last we heard of the company.
I complained to Companies House and suggested that some sanction should be introduced to gain access to the accounts. That was when I was told about the gap in the law, which means that the accounts, which must have existed, continue to remain hidden from the public gaze because when a company is dissolved it no longer has an obligation to provide information. I submit that the failure to file accounts, far being an administrative oversight, was a deliberate and calculated exploitation of the loophole in the Companies Acts, which the new clause would close.
In an article published in The Sunday Telegraph on 30 March 1997, Mr. Fayed commented on the DTI report into Harrods:
Ten years ago, just before the 1987 election, the Thatcher Government commissioned a report that called me a liar…The British Government took away my reputation and good family name after 40 years' hard work. I will not go to my pyramid leaving my children under the shadow of a report that is unfair and untrue. I have seen the arrogance of power at very close quarters. I did not like what I saw. I will campaign for root and branch reform. That is why I gave away £1 million last week to the People's Trust, an independent pressure group dedicated to cleaning up politics.
What happened to that £1 million? How much was used to pay the company directors for past services rendered? How much was left when the company was dissolved by default of filing its accounts and what happened to the donations that the company solicited from possibly naive members of the public?
A report in The Guardian of March 20 1997 stated that the trust intended to send out 2 million letters to members of the public asking for £5 subscriptions to support its cause.

Mr. Forth: Does my hon. Friend know whether that company, or another in a similar position, could make political donations before it was dissolved, which also could not be tracked? Does he not think that that is also an important consideration?

Mr. Chope: That is an incredibly important consideration. That abuse—I submit that that is what it was—having been uncovered, it is incumbent on the Government to take immediate action to prevent it from happening again. As my right hon. Friend implied, the more we are concerned with transparency in politics and donations to political parties, the more important it is to prevent people from setting up such a company and using it as a means to change public opinion with the support of large sums of money. As I said, £1 million was involved, although some press reports suggest that the sum was larger.
2.45 pm
We do not know how many donations were given or what was received, if anything, for the £5 subscriptions. All that we know is that no creditor complained, which meant that the company was able to disappear in the circumstances that I described.
It is worth reminding ourselves that People's Trust Ltd. was not a small, insignificant company. It must have had a turnover of more than £1 million, because it had a starting donation of £1 million from Mr. Fayed. It also had prominent public figures on its board. Apart from Mr. Fayed, the board contained Mr. Michael Cole, Mr. Fayed' s then press officer; Mr. Andrew Neil, a former editor of The Sunday Times and still a distinguished journalist; and Mr. Robert Fallowfield, one of Mr. Fayed' s accountants. Lord Alton of Liverpool was also on the board, as was Mr. Alex Carlile, a former hon. and learned Member of the House. Hon. Members will recall that none other than Mr. Carlile was the first to raise in the House the story in The Guardian involving the then hon. Member for Tatton. He did so on a point of order at about 10 pm when he had already been tipped off that The Guardian would run the story the next day, thereby enabling all the other newspapers to carry the story. He provided a service for—

Mr. Deputy Speaker: Order. The hon. Gentleman is straying wide of the mark. He has given details, at some length, about one company and its director, which is reasonable, but I hope that he will relate his remarks rather more precisely to the new clause.

Mr. Chope: I certainly will, Mr. Deputy Speaker. To conclude the point, the company secretary was a Mr. Christopher Graffius, a former researcher for Lord Alton.
Although I have not given examples of other companies, I submit that the case that I have described is sufficient to warrant Government intervention and the incorporation of the new clause in the Bill. One of the main responsibilities of directors, along with the privilege of incorporation, is the duty of full disclosure. Failure to deliver company accounts is a grave breach of directors' duty to make a full disclosure.
The Minister for Competition and Consumer Affairs responded to my argument in Standing Committee. He said that section 5 of the Company Directors Disqualification Act 1986
provides that a director who is prosecuted for not filing accounts can be disqualified on the basis of that single offence.—[Official Report, Standing Committee B, 7 November 2000; c. 124.]
In fairness to him, it then became apparent that the advice given to him by his officials, which led him to make that statement, was incorrect. He admitted that he was wrong and that, under the present company law, it is not possible to prosecute a director for a single failure to file accounts, however grave or mischievous that failure might be. He agreed that it might be better to table an amendment to section 3 of the 1986 Act. That is what the new clause represents. I hope that the Minister will agree to the new clause in its revised form, because it meets his concerns. There was general concern in Committee that the loophole needs to be closed.

Mr. John Burnett: Hear, hear.

Mr. Chope: I am glad that the hon. Gentleman agrees. I formulated the new clause in such a precise way largely because of suggestions that he made in Committee. I am grateful for his advice and assistance.
Amendment No. 14 arises from debate in Committee—at column 120, on 7 November 2000—on amendments Nos. 5, 7 and 52, which would have made an agreed statement of facts a precondition of acceptance by the Secretary of State of a disqualification undertaking.
The Minister, in reply to that debate, said that it was for the Secretary of State to decide to accept the undertaking, and that it would be unduly restrictive and might lead to delay and increased costs if the Secretary of State could accept an undertaking only when there was an agreed statement of facts.
Amendment No. 14 deals with all the Minister's concerns, and thereby confines and limits the requirement to the production of a summary statement that will be a matter of public record. I hope that the Minister will agree that that is one way of partly satisfying concerns that have been expressed by the Select Committee on Trade and Industry and many other people. Does the hon. Gentleman also agree that the basis on which a disqualification order is made—or an undertaking for disqualification is accepted—should be set out in reasonably full terms, so that it is available to the public and on the public record should a director subsequently seek a variation in his disqualification undertaking or face disciplinary proceedings in any professional body. I hope that he will accept amendment No. 14, too.
Both new clauses and amendment No. 14 are developments from the very useful debate that we had in Committee. I hope that they will find favour with the Government.

Mr. Burnett: Liberal Democrat Members give qualified support to new clause 1 and complete support to new clause 2.
The hon. Member for Christchurch (Mr. Chope) was right to ask why a person who is unfit to run a limited company should be able, either alone or in partnership, to run a business. There is much force in that argument. I have examined in some detail the Company Directors Disqualification Act 1986, and my view is that, in most cases of disqualification under that Act—especially when they relate to criminal offences and the test of beyond all reasonable doubt has been met—the hon. Gentleman is correct in that assertion. Why should such individuals be able to run a service business either on their own account or in partnership with others?
I have nevertheless re-examined in detail section 3 of the 1986 Act. As the hon. Member for Christchurch said, in Committee, we discussed at length section 3, which could be said to be fairly draconian in its treatment of directors. It deals with persistent defaults, which it states can be
conclusively proved by showing that in the five years ending with the date of the application he—
the director—
has been adjudged guilty (whether or not on the same occasion) of three or more defaults in relation to those provisions.


I know that there are other tests, but that one is pretty tough on directors—albeit rightly. Nevertheless, I do not think that, as a result of disqualification under section 3 of the 1986 Act, a person should be disabled from, for example, starting his own small business perhaps as a shopkeeper or a window cleaner.
As I said, Liberal Democrat Members give qualified support to new clause 1. Although I believe—for the reasons that I have given—that its terms are draconian and go a little too far, the new clause certainly has merit in dealing with those who have been found guilty of a criminal offence. I hope that the Minister will consider that.
New clause 2 has been tabled to overcome the problem with the word "persistent" in section 3 of the 1986 Act. I believe that, in some cases, the failure to deliver to the Registrar of Companies just one set of accounts can be extremely important and have far-reaching consequences. I therefore support the new clause, which is drawn wisely and subtly.
New clause 2 contains two tests, whereas initially, in Committee, we had only one—which was, as the hon. Member for Christchurch said, draconian. The first of the tests is that a person
has been a director of a company which was struck off the register of companies by reason of its failure to deliver company accounts.
The second important test which we are now able to debate is whether the person's
conduct as a director of that company makes him unfit to be concerned in the management of a company.
There are now, correctly, two hurdles. New clause 2 is sensible, and Liberal Democrat Members strongly support it.

Mr. John Butterfill: I support my hon. Friend the Member for Christchurch (Mr. Chope) on both new clauses. I accept and very much agree with what he said about the spatchcock nature of particular proposals in the Bill.
My hon. Friend has been a distinguished member of the Trade and Industry Committee, on which I serve, and which considered the draft Bill in some detail towards the end of last year. In our report issued in December 1999 we broadly welcomed the general thrust of the draft Bill's proposals, but we felt very much that, on some matters, it was somewhat premature to legislate. We particularly felt that, as a general review of insolvency procedures was in progress, it might have been better to leave everything until we could have a more comprehensive Bill.
Nevertheless, the Committee felt that the draft Bill raised some important issues and that, on balance, it was probably right to go ahead with some restricted amendments, subject to various safeguards that we suggested. Although I regret to say that some of those safeguards have not appeared in the Bill, if I am able to catch the eye of the occupant of the Chair, I shall deal specifically with some of them in a later debate. Overall, however, it is right to introduce—as my hon. Friend the Member for Christchurch is seeking to do—the new clauses and amendments. It is very important that the public should be protected.
I must declare a personal position. I was a director of Maples Group Ltd, which went into liquidation a few years ago. Perhaps my experience as a non-executive

director of that company will be helpful to the House. I was invited to join the board of Maples Group Ltd—the parent company of Maples Stores plc, the furniture retailer—by CinVen, which is the venture capital arm of the coal industry nominees who administer the coal industry pension fund.
At the time, the directors of CinVen said to me, "We have a company that we backed in a management buy-out and is well-advanced. Although it is not yet profitable, it is very much nearing profit, and it will be near market levels. We want to strengthen the board before the company is floated. Would you join the board, with your experience of general corporate governance and your particular experience of property matters?" I am a chartered surveyor, and the company's main assets were probably the shops that it owned or on which it had leases.
On that basis, I agreed to join the board of the company. Within a few months of doing so, I became very concerned about the figures that the executive directors were giving the board, because the cashflow figures did not match the trading figures that they were reporting to us.
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Shortly after I joined the board, Mr. Tom Vyner, the then deputy chairman of Sainsbury's, was also invited to join as chairman, to strengthen the board and to consider its trading activities in greater detail. After four or five months, Tom Vyner and I became increasingly concerned that the company's cashflow did not reflect the sales and turnover figures that the executive team were giving us. After four and a half months, we took the most unusual and rather hostile step, as non-executive directors, of calling in investigating accountants. We did so through a little bit of subterfuge: we said that we wanted the investigating accountants to look at a few individual branches to find out why figures were not entirely matching up and to report to the whole board.
As soon as we received the first verbal report of the investigating accountants, we put all the executive directors on gardening leave. When we received the subsequent report, we summarily dismissed them. I have to be careful about what I say, because the executive directors may be subject to legal prosecution and it is important that I do not prejudice that case. Suffice it to say that the duties of directors are paramount and their obligation to protect the public, customers, suppliers and everyone else is their first duty.
It is right that the law should be draconian in such matters and that if directors have misbehaved in any way—whether criminally or simply negligently—the protection of the public should come before the possibility of their continuing to trade in another venture and possibly putting the public at risk. The duty of the law must be, first, to protect the public and, secondly, to consider whether those people should be allowed to trade in another venture. For that reason, I strongly support the new clauses proposed by my hon. Friend the Member for Christchurch.

Mr. Richard Page: I very much support what my hon. Friend the Member for Christchurch (Mr. Chope) has said. He has introduced the real world into our debates by speaking about rogue traders and the impact that they can have on the public.
He asked why the Bill does not contain measures to deal adequately with those people—why they are being missed out and allowed to continue their activities.
As my hon. Friend said, the measure that he proposed in Committee was a little short on certain legal requirements but its thrust and direction were right none the less. We hoped that the Minister would introduce a measure of his own, drafted by the skilled officials who ensure that legislation contains no loophole that can be challenged in the courts. I regret that no such proposal has appeared, but the Minister now has his chance to accept my hon. Friend's proposal, which has been so ably supported by my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) and the hon. Member for Torridge and West Devon (Mr. Burnett). In my own humble and stuttering fashion, I shall return to that a little later if I may.
Before the Minister responds, I should like him to consider an article that I read recently in the New Statesman, which has recently run a profile of him. May I say that it is completely relevant to the new clause, Mr. Deputy Speaker, as I can see that you are on the edge of the Chair, waiting to leap in if I go out of order for 30 seconds? This engaging little piece states:
It may have escaped many people's notice that we have a Minister for corporate social responsibility—
the Minister who will soon be standing at the Dispatch Box. I hope that he will bear in mind the fact that he has that corporate social responsibility, and consider how he can apply it to stop rogue traders regularly ripping off the public. I regret that the Minister has not introduced such a measure in response to the clear and positive suggestion in Committee.
I want to speak to amendment No. 22, which my hon. Friend the Member for Hertford and Stortford (Mr. Wells) and I tabled. The proposals for expediting and simplifying processes by which directors can be disqualified must be welcome. I accept the figures produced by the DTI and offered by Ministers in relation to the proportion of disqualification orders that do not proceed to court, and their argument about the advantages of arrangements that permit the Secretary of State to accept undertakings from people whose conduct—let us be delicate—has been faulty.
Of course it is important to safeguard the interests of those who fall within the ambit of the new procedure. On the other side of the coin, it is equally important that the interests of the public should be protected against the premature lifting or termination of disqualification undertakings. I always listen carefully to the Minister, but I did so with special care when he argued in Committee that the court should have a discretion as to whether to reduce a period for which an undertaking should be in force or to provide for it to cease to be in force. The hon. Gentleman tantalised me and, I suspect, mystified the rest of the Committee—perhaps that should be the other way round—with his immortal words:
a factor other than a material change in circumstance since the person gave the undertaking may be of sufficient importance to persuade the court to make an order …—[0fficial Report, Standing Committee B, 7 November 2000; c. 122.]
The hon. Gentleman never explained what he had in mind. He gave no example to support his argument. I am a great believer in the notion that real-life examples make the

case and put flesh on the legal bones. I can think of several facetious arguments about those who have given such undertakings being disappointed or even bursting into tears if their disqualification undertakings are not lifted or shortened, but I can think of no serious ones. I hope that the Minister will be more forthcoming.
If the Secretary of State has good grounds to seek and accept a disqualification undertaking from an individual, there should be significant material grounds for any application to the courts requesting that undertaking to be shortened or terminated. It is no good simply announcing that the courts will have the power to take into account any relevant factors in determining such an application under new section 8A(2). The Bill should include a clear direction to the courts that they must have material justification to alter or end the period of the disqualification undertaking.

Mr. Butterfill: Does my hon. Friend agree that one of the problems is that the prosecution case may take some years to come before the courts? Although the Secretary of State and the Department may be convinced that wrongdoing has occurred, it may not be possible to rely on a conviction in the courts until quite a lot of damage is done in other companies.

Mr. Page: My hon. Friend is correct, but the purpose behind the Bill is to bring about such disqualifications more quickly. That is one of the reasons why we have given it qualified support. The difficulty is that we see written into it the means whereby disqualification could become quicker, which can be to the advantage of a director, obviating the need for huge legal costs. Written into the Bill is a way for the director to get out of the disqualification period under the standard time and for no material reason. I am trying to persuade the Minister to come up with reasons.
I do not share the Minister's rose-tinted view of life; he thinks that the courts will see through all the old lags who are trying to put one over on them. Anyone with business experience, or even experience of dealing with politicians, will know how persuasive and plausible such people can be. It is better that we take specific precautions now than that we find ourselves obliged to take them later.
It is proposed to give the director a second bite of the cherry. Under the new procedures envisaged in the clause, the Secretary of State may accept a disqualification undertaking, which has the same effect as a disqualification order. So far, so good. There is a new procedure for compromising disqualification proceedings without their even being commenced. The present way of compromising such proceedings is by way of a carecraft order. If such an order were made, the director would be bound by it. If he wants to be a director of another company, he has the right, under section 17, to apply for leave to do so.
Under the new procedure, the director would still be able to apply for leave to be a director of another company. However, he is given an additional right by the proposed new section, under which he can apply to the court for the disqualification undertaking to cease to be in force or for the period of disqualification to be reduced. Does this give the director the right to backtrack or to welsh on the bargain previously made by the Secretary of State? [Interruption.] I am sorry to use the word "welsh" like that; I saw the Minister shudder and I wish to withdraw that word.
Any director with any sense will agree to a disqualification undertaking. Having fixed the maximum period for disqualification, he can then can apply, under the new section, to see whether he can reduce the period or get out of it altogether. We know that the period cannot be increased, so he has nothing to lose except the cost of court proceedings. New section 8 is a difficult luxury to justify.
I am realistic and I know that if we tabled an amendment to remove the section, the Minister would more than likely reject it. I have tabled an amendment which could be regarded as a compromise and which may be acceptable to the Minister and the Government. I propose to limit the second bite of the cherry to where there is a material change of circumstances only. The proposal does not go as far as I would like it to but, at the very least, it means that the director will not be able to give a disqualification undertaking and then apply immediately to have it cease or have it reduced. That would prevent a fairly obvious abuse and it would be difficult for the House to object.
To those who are unconvinced, I would say this: why should a director who has freely given a disqualification undertaking have the right to apply to the court to get out of it without there having been a change of circumstance—particularly when he has the right to apply for leave to act as a director of a specific company? If it remains unamended, that is the way in which the measure will operate in more cases than I would care to imagine. From my business experience, I have seen company directors reappear like phoenixes, using the same modus operandi. They have appeared to be almost untouchable. The new clause would give a specific protection to the public which does not exist at the moment.
3.15 pm
Perhaps I would be less sympathetic towards the new clause if I knew that there was to be a consumers Bill in the Queen's Speech. However, the word on the street is that there is to be no such Bill. The Minister can look me in the eye and tell me if I am wrong and, if so, I will withdraw these remarks. A specific promise was given that, in the lifetime of the Parliament, there would be a consumers Bill. One of the areas that such a Bill would tackle is the problem of rogue traders.

Mr. Forth: My hon. Friend is being far too charitable. Even if the Minister felt able today to anticipate the Queen's Speech and assure my hon. Friend that there would be a consumers Bill in the Government's programme, the Minister could not guarantee that that Bill would reach the statute book because the Prime Minister might intervene and call the election ahead of the time at which he needed to. My hon. Friend would be left in a position where an undertaking would have been given—perhaps in good faith by the Minister—which could not be fulfilled. I hope that my hon. Friend will not feel obliged to back off even if the Minister gives an undertaking about the Bill today.

Mr. Page: I am frequently accused of being too charitable but that's the way it is: I am one of those creatures who go through life being charitable.

Mr. Forth: Well, I am not.

Mr. Page: I well know that my right hon. Friend is not charitable. He is a very hard man. I realise that any

political party needs a balance of the soft and the hard. The soft version is at the Dispatch Box; the hard version is one or two rows behind.
The matter raised by my hon. Friend the Member for Christchurch is serious. If the Minister can assure us that there will be a consumer Bill, we will look at it and give it whatever support we can to ensure that the public are protected from rogue directors. We will see what we can do to get the Bill on the statute book as quickly as possible—subject to a reading of the small print. I would hate to give a carte blanche undertaking here without seeing the specifics of the Bill. I am given to understand that a section in a consumers Bill could deal with these matters.
I draw my remarks to a close by thanking the Minister for sending to every member of the Committee the injunction directive and the directives that will be covered by the measure. According to his letter, there are 11, although I have not counted them to see whether that is so. The notice sent with the letter states:
Further directives, including the proposed directive on distance selling of financial services will be added in due course.
That may prevent a certain amount of distress to members of the public caused by directors not acting correctly in that area. However, measures are already in place that make it difficult for rogue traders to operate in limbo in that area. I thank the Minister for his letter and look forward very much to what he has to say, bearing in mind the fact that, according to the article in the New Statesman he is in a position of "corporate social responsibility". I hope that he can find it in his heart to accept amendment No. 22 and give serious consideration to new clause 2, tabled by my hon. Friend the Member for Christchurch.

The Minister for Competition and Consumer Affairs (Dr. Kim Howells): By my standards, we have had a lengthy debate on this group of amendments. May I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on the superb intelligence that he gets from my Department or wherever the Queen's Speech is being drafted? He knows what is in the Queen's Speech, although I do not. I am sure that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) will be delighted to know that the hon. Member for South-West Hertfordshire has helped to boost the circulation of the New Statesman by purchasing a copy of that estimable organ. I have seen my portrait in the magazine and, if the hon. Gentleman was using a Library copy, I shall report him.
At the beginning of his speech, the hon. Member for Christchurch (Mr. Chope) said that I am in danger of missing the bus in relation to implementing enforcement measures against rogue traders. However, I fear that the hon. Gentleman has missed the point of the legislation. For the benefit of those who were not present in Committee when amendments similar to the hon. Gentleman's were debated, I shall reiterate that the main purpose of the Company Directors Disqualification Act 1986 is to provide the public with protection against those who abuse the privilege of limited liability. Sections 6 and 7 of the Act allow the Secretary of State to apply to court for a disqualification order against a director of an


insolvent company whose conduct in relation to the company is such as to make him unfit to be involved in the management of a limited company.
In response to the hon. Member for Bournemouth, West (Mr. Butterfill), I was glad to press ahead with the provisions in the Bill—limited though they are, according to him—and am pleased that he gave us the benefit of his experience of a company that found itself slipping into insolvency and receivership. The hon. Gentleman illustrated clearly why the relevant laws should be tough in relation to the honesty and probity of company directors. Section 8 of the Company Directors Disqualification Act enables the Secretary of State to apply for a disqualification order against a person who has been the subject of a statutory investigation, as provided for in that section, and in the case of whom it appears to be expedient in the public interest that the person should be disqualified. Similarly, clause 6 of the Bill will allow the Secretary of State to accept a disqualification undertaking in such circumstances under sections 7 and 8 of the 1986 Act.
I repeat that I have some sympathy with the concerns of the hon. Member for Christchurch, but the 1986 Act is not the appropriate measure with which to try and address the issue of rogue traders. Those concerns need to be dealt with in other ways, and we are doing that through, for example, the useful directive that the hon. Gentleman told us about; better enforcement of consumer legislation, including measures on e-commerce; pursuing issues that cause particular concern, such as the servicing and repairs of cars; as well as the scheme that the hon. Gentleman mentioned, in which someone purporting to sell windows in his constituency is just operating a scam. We shall also deal with rogue traders through an important series of measures to modernise consumer advice networks. As I indicated in Committee, the impending EC injunctions directive should be of some help in that area too.
Whatever the hon. Member for Christchurch thinks about disqualified directors being able to trade as sole traders, it would be inappropriate for the 1986 Act to go any further by restricting a person's right to do so. Such restrictions need to be dealt with in other ways. New clause 2 deals with issues relating to that and, as the hon. Gentleman said, is similar to the amendment that he tabled in Committee, although he revised the amendment's drafting in the light of our debate there. New clause 2 would introduce a new clause into the 1986 Act and would allow the court to make a disqualification order against someone when the court considers that he or she has been a director of a company which was struck off the register of companies because it failed to deliver company accounts, and it considers that the person's conduct as a director of that company makes him or her unfit to be involved in the management of a company.
As I explained in Committee, directors can be disqualified for failure to file their company's accounts under sections 3 and 5 of the 1986 Act for defaults in relation to various provisions of company legislation, including failure to file accounts at Companies House.

Mr. Burnett: Will the Minister give way?

Dr. Howells: In a moment. I accept that neither provision would allow for disqualification following only one default, as the hon. Member for Christchurch said.

Mr. Burnett: Will the Minister give way?

Dr. Howells: If the hon. Gentleman can contain himself, I will give way in a second.
It is not clear how the amendment would allow for a disqualification after one default, either. Nevertheless, disqualification on default would be going too far in any event.

Mr. Burnett: Does the Minister agree that, in some cases, the failure to deliver just one set of accounts can be of the greatest importance? Surely, a person who fails to do so on being given notice or who is judged guilty of conduct that makes him unfit should be disqualified.

Dr. Howells: I shall try to deal with that in a moment. The two matters are not directly related and I shall try to make it clear why that is so in relation to the legislation.
It is not our intention to revisit in the Bill what constitutes unfit conduct for the purposes of achieving a disqualification. Where there are concerns about the failure of a company to file accounts, another remedy exists. A complaint made to the Registrar of Companies, who has enforcement responsibility in this area, will result in him taking appropriate action against the company. If the company is carrying on business or is in operation, the registrar will take enforcement action to secure delivery of the documents, up to and including prosecuting the directors in the magistrates court or, in Scotland, referring the matter to the prosecuting authorities.
In addition, the late filing of accounts attracts an automatic civil penalty. If, in the registrar's opinion, the company is not carrying on business or is not in operation and is defunct, he can initiate statutory action to dissolve it and strike it off the register.
In Committee, the hon. Gentleman raised the fascinating case of the People's Trust, and he may wish to know that it is currently up to date with all its filing requirements at Companies House. Indeed, I started to dig around a bit on the hon. Gentleman's behalf, given his fascination with that company. The trust was incorporated on 22 November 1996, but failed to file accounts or annual returns as required by the Companies Act 1985. It failed to respond to statutory letters inquiring whether it was still in operation or carrying on business under section 652 of the 1985 Act. It was struck off and dissolved on 8 September 1998 and was restored to the register after a relatively short period, on 5 November 1998. All outstanding documents filed at the time of restoration are up to date with all current filing requirements. I would be the last person in the world to defend Mr. Fayed, but that should be on record as it is perhaps an additional piece of information that I am sure would interest the hon. Member for Christchurch.

Mr. Forth: Perhaps the Minister could clarify something. He seems to be saying that all the required information is available from 1998 onwards since the company was restored to the register. Is he also telling us that we now know everything that we need to know and


should know about the company between 1996 and 1998, as that is the period of the most interest to my hon. Friend the Member for Christchurch?

Dr. Howells: I understand that the relevant information is there, but I am sure that the hon. Member for Christchurch could find out very quickly by accessing the terrific new computerised filing system in Companies House. He need merely get on to his PC—

Mr. Chope: I do not have a PC.

Dr. Howells: That has certainly thrown me. It would be good if the hon. Gentleman had a PC, but if he does not have one he cannot access the files online. I suggest that he travels to Cardiff, which is an excellent city, goes to Companies House and talks to the estimable staff there, who will do the job for him. By the way, I understand that there are even short courses to help people access files via their PCs, if the hon. Gentleman is interested, but clearly he is not.
Amendment No. 14 would require the Secretary of State to prepare a summary statement of the outcome of the relevant investigation before accepting a disqualification undertaking from a director, and to make that summary a matter of public record. I am not at all sure that the hon. Member for Christchurch would like the effect of the amendment, were it accepted. It would seem to impose a duty on the Secretary of State to make public a summary of the unfit conduct he alleges against a director following the completion of his investigation.
Although I would ask which investigation the hon. Gentleman needs to refer to, that is not at all clear and only section 8 of the Company Directors Disqualification Act expressly refers to investigations. That summary would include any allegations that the Secretary of State was prepared subsequently to withdraw before accepting a disqualification undertaking.
Let me remind the House of how we envisage the process working. When inviting a director to offer an undertaking, as a matter of practice, the Secretary of State will put the unfit conduct that he alleges to the director concerned so as to give the director the opportunity to respond to it. It might be that the director is able to demonstrate to the satisfaction of the Secretary of State that one or more of the allegations made no longer stands up—in other words, that the case that the Secretary of State is putting to him is not accurate in one or more respects. A director may be able to introduce new evidence which puts an entirely different complexion on the conduct concerned. Where that occurs, the Secretary of State may withdraw that allegation and consequently be prepared to accept an undertaking for a lesser period. In those circumstances, if the amendment were agreed to, the public record would disclose an allegation of unfit conduct that had subsequently been withdrawn. I am sure that the hon. Member for Christchurch would agree that it would be unjust to place a director in that position. It does not seem right to us and we do not consider that the amendment should become part of the Bill. We remain of the view that the public record at Companies House should only show particulars of disqualification undertakings accepted by the Secretary of State.
I now turn briefly to amendment No. 22, which was addressed by the hon. Member for South-West Hertfordshire. It is the same as amendment No. 71, which

we debated in Committee. For those who have not had the opportunity to read Hansard, I shall repeat the point that I made. We do not consider that the court should be restrained in the way that is proposed under the amendment. It would be far more appropriate for the court to have a discretion on whether to reduce the period for which an undertaking is to be in force or provide for it to cease to be in force. It could be that some factor other than a material change in circumstances since the person gave the undertaking—a change in law, for example—would be of sufficient importance to persuade the court to make an order under new section 8A. According to the text of the new section, the court will be able to take into account any factors that it considers relevant when making such an order. The court will be helped in reaching a view by any matters that the Secretary of State calls to its attention under subsection (2) of the new section. With that, I urge the hon. Member for Christchurch to withdraw his amendment.

Mr. Chope: I am grateful to the Minister for his response, although I find it disappointing in some respects. He argued that my amendment No. 14 could cause injustice to directors because the statement of facts might subsequently be proved to be inaccurate. That is why, when we made the original proposal in Committee, we said that we wanted an agreed statement of facts. The Minister raised all sorts of objections to that. He said that it might cause delay or that it might be difficult to get an agreement. We then moved an amendment to overcome those obstacles and now, in typical civil service fashion, the Minister raises objections to the idea that there should be a non-agreed statement of fact. It is desirable to have more facts available on the public record than there will be under the Government's proposals. That is my concern.
As for the Minister's arguments in relation to new clauses 1 and 2, first, I am grateful to him for letting us know that the People's Trust has become a phoenix rising from the ashes. Back in 1997 there was an enormous amount of press comment saying that the People's Trust was no longer trading, had gone out of business and had vacated its luxurious Knightsbridge offices. It was reported that the disappearance of the People's Trust
marks the end of Mr. Fayed's third foray into public morals.
That is how the Evening Standard described the situation on 8 August 1997.
Perhaps the resurrection of the People's Trust suggests that there is yet another foray on the way. I shall look with interest at the contents of the documents to which the Minister has drawn our attention, but I do not think that the fact that they have now been filed alters the burden of my argument. I illustrated my contention that there was a gap in the law and the Minister agreed. However, he then recited a series of sanctions which, although they might apply to different cases do not apply to a case in which somebody makes only one serious breach of his duty to file accounts.

Mr. Page: If my hon. Friend is in the slightest bit worried about finding examples to prove his point, I can spend an hour or two with him after the debate giving him the necessary names.

Mr. Chope: I do not think we need any more examples. The examples that I quoted are sufficient. The fact that


the Minister has not been able to show us what remedies are available demonstrates that there is a gap in the law that needs to be filled.

Mr. Burnett: The hon. Gentleman is quite right. Not only should there be a duty to file accounts, but there should be a duty to file one set of accounts in good time. In the case of the additional clause which is qualified, as new clause 2 is, there should be a draconian sanction for failure, and there is not one now.

Mr. Chope: The hon. Gentleman is absolutely right. I am very grateful to him for his involvement in the promotion of new clause 2. My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) spoke earlier about the implications for limits on party political funding. It is no good if people say that they will not file the accounts, and the company is then dissolved and struck off, and, at some stage in the future, when the time for investigating the funding of parties in a general election campaign is over, the company is resurrected.
I was caught out because I had assumed that, once a company's accounts were no longer available because it had been struck off and dissolved, that was the end of the matter. Now the Minister says that, in this specific case, the company came back later. That is no good. The people responsible for that appalling default of their obligations under company law have carried on with impunity. New clause 2 would put an end to that loophole.
The Minister made a rather feeble response to new clause 1. We are talking about serious issues of rogue traders. The Government purport to be on the same side as us in campaigning against rogue traders and the injustice that they cause to the hapless individual. An early-day motion has been tabled on the subject and the hon. Member for Luton, South (Ms Moran) promoted a ten-minute Bill supporting action against rogue traders.
I tabled the new clause to take action on the matter, and the Minister's response is that it is not appropriate. That is not good enough. The people will decide on this. The Government have been going on about how they will do something against rogue traders, but they are merely paying lip service to people's concerns. They are not legislating to close the loopholes.
I thank my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) for introducing into the debate a pertinent example drawn from his own experience as a non-executive director and as a member of the Trade and Industry Committee; I thank my hon. Friend the Member for South-West Hertfordshire (Mr. Page) for his support for my new clauses and amendments; and I thank the hon. Member for Torridge and West Devon (Mr. Burnett) for his help and advice.
It would be a gross indulgence to divide the House on more than one of the new clauses. As new clause 2 would remedy the greatest mischief straight away, and there is no complaint about its drafting, that will be the right one on which to have a vote. I hope that hon. Members will support it when I give them the opportunity to do so. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 2

DISQUALIFICATION ORDERS: UNFITNESS OF DIRECTOR

'. After section 3 of the Company Directors Disqualification Act 1986 there is inserted the following new section—

Disqualification orders: unfitness of director

.—(1) The court may make a disqualification order against a person where it appears to it—

(a) that he has been a director of a company which was struck off the register of companies by reason of its failure to deliver company accounts, and
(b) that his conduct as a director of that company makes him unfit to be concerned in the management of a company.

(2) The maximum period of disqualification under this section is five years.".'.—[Mr. Chope.]

Brought up, and read the First time.

Motion made, and Question put, That the clause be read a Second time:—

The House divided: Ayes 46, Noes 221.

Division No. 337]
[3.44 pm


AYES


Arbuthnot, Rt Hon James
Loughton, Tim


Atkinson, Peter (Hexham)
McIntosh, Miss Anne


Beggs, Roy
Maclean, Rt Hon David


Beith, Rt Hon A J
Major, Rt Hon John


Boswell, Tim
Michie, Mrs Ray (Argyll & Bute)


Brand, Dr Peter
Moore, Michael


Bruce, Malcolm (Gordon)
Morgan, Alasdair (Galloway)


Burnett, John
Page, Richard


Burstow, Paul
Portillo, Rt Hon Michael


Butterfill, John
Randall, John


Campbell, Rt Hon Menzies (NE Fife)
Rendel, David



Robathan, Andrew


Chapman, Sir Sydney (Chipping Barnet)
Russell, Bob (Colchester)



Shephard, Rt Hon Mrs Gillian


Clappison, James
Spring, Richard


Clifton-Brown, Geoffrey
Stanley, Rt Hon Sir John


Cotter, Brian
Steen, Anthony


Davey, Edward (Kingston)
Syms, Robert


Davis, Rt Hon David (Haltemprice)
Taylor, Rt Hon John D (Strangford)


Emery, Rt Hon Sir Peter
Taylor, Sir Teddy


Foster, Don (Bath)
Tyler, Paul


Gray, James
Winterton, Mrs Ann (Congleton)


Hawkins, Nick



Heath, David (Somerton & Frome)
Tellers for the Ayes:


Lewis, Dr Julian (New Forest E)
Mr. Eric Forth and


Lilley, Rt Hon Peter
Mr. Christopher Chope.


NOES


Adams, Mrs Irene (Paisley N)
Bradley, Keith (Withington)


Ainger, Nick
Bradshaw, Ben


Anderson, Donald (Swansea E)
Brinton, Mrs Helen


Atkins, Charlotte
Brown, Rt Hon Nick (Newcastle E)


Austin, John
Buck, Ms Karen


Banks, Tony
Burden, Richard


Barnes, Harry
Butler, Mrs Christine


Battle, John
Caplin, Ivor


Bayley, Hugh
Casale, Roger


Beard, Nigel
Caton, Martin


Beckett, Rt Hon Mrs Margaret
Cawsey, Ian


Begg, Miss Anne
Clapham, Michael


Bell, Martin (Tatton)
Clark, Rt Hon Dr David (S Shields)


Bell, Stuart (Middlesbrough)
Clarke, Eric (Midlothian)


Bennett, Andrew F
Clelland, David


Bermingham, Gerald
Coaker, Vernon


Berry, Roger
Coleman, Iain


Blackman, Liz
Colman, Tony






Connarty, Michael
Leslie, Christopher


Cook, Frank (Stockton N)
Lewis, Ivan (Bury S)


Cooper, Yvette
Linton, Martin


Corbyn, Jeremy
Lloyd, Tony (Manchester C)


Corston, Jean
Lock, David


Cousins, Jim
Love, Andrew


Cox, Tom
McAvoy, Thomas


Cryer, John (Hornchurch)
McCabe, Steve


Cunningham, Jim (Cov'try S)
McCafferty, Ms Chris


Darling, Rt Hon Alistair
Macdonald, Calum


Darvill, Keith
McDonnell, John


Davey, Valerie (Bristol W)
McGuire, Mrs Anne


Davidson, Ian
McIsaac, Shona


Davies, Rt Hon Denzil (Llanelli)
Mackinlay, Andrew


Davis, Rt Hon Terry (B'ham Hodge H)
McNulty, Tony



MacShane, Denis


Dawson, Hilton
Mactaggart, Fiona


Dismore, Andrew
McWalter, Tony


Dowd, Jim
McWilliam, John


Drew, David
Mahon, Mrs Alice


Drown, Ms Julia
Mallaber, Judy


Dunwoody, Mrs Gwyneth
Marsden, Gordon (Blackpool S)


Eagle, Angela (Wallasey)
Marsden, Paul (Shrewsbury)


Eagle, Maria (L'pool Garston)
Marshall, David (Shettleston)


Edwards, Huw
Martlew, Eric


Ennis, Jeff
Maxton, John


Etherington, Bill
Merron, Gillian


Field, Rt Hon Frank
Michael, Rt Hon Alun


Fitzpatrick, Jim
Michie, Bill (Shef'ld Heeley)


Flint, Caroline
Miller, Andrew


Flynn, Paul
Mitchell, Austin


Foster, Michael Jabez (Hastings)
Moffatt, Laura


Galloway, George
Moran, Ms Margaret


Gapes, Mike
Morris, Rt Hon Ms Estelle (B'ham Yardley)


Gardiner, Barry



Gibson, Dr Ian
Mountford, Kali


Godman, Dr Norman A
Murphy, Jim (Eastwood)


Golding, Mrs Llin
Naysmith, Dr Doug


Gordon, Mrs Eileen
O'Brien, Bill (Normanton)


Griffiths, Jane (Reading E)
O'Brien, Mike (N Warks)


Griffiths, Nigel (Edinburgh S)
O'Hara, Eddie


Grogan, John
Olner, Bill


Hall, Patrick (Bedford)
Osborne, Ms Sandra


Hamilton, Fabian (Leeds NE)
Palmer, Dr Nick


Hanson, David
Pearson, Ian


Healey, John
Perham, Ms Linda


Henderson, Ivan (Harwich)
Pike, Peter L


Heppell, John
Plaskitt, James


Hesford, Stephen
Pollard, Kerry


Hill, Keith
Pond, Chris


Hinchliffe, David
Pope, Greg


Hodge, Ms Margaret
Pound, Stephen


Hope, Phil
Prentice, Ms Bridget (Lewisham E)


Howells, Dr Kim
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Quinn, Lawrie


Hurst, Alan
Radice, Rt Hon Giles


Hutton, John
Rammell, Bill


Illsley, Eric
Raynsford, Nick


Jackson, Helen (Hillsborough)
Reed, Andrew (Loughborough)


Jenkins, Brian
Reid, Rt Hon Dr John (Hamilton N)


Jones, Mrs Fiona (Newark)
Roche, Mrs Barbara


Jones, Ms Jenny (Wolverh'ton SW)
Rooker, Rt Hon Jeff



Rowlands, Ted


Jones, Dr Lynne (Selly Oak)
Roy, Frank


Jones, Martyn (Clwyd S)
Ruane, Chris


Keeble, Ms Sally
Ruddock, Joan


Keen, Alan (Feltham & Heston)
Salter, Martin


Keen, Ann (Brentford & Isleworth)
Sarwar, Mohammad


Kemp, Fraser
Sawford, Phil


Kennedy, Jane (Wavertree)
Sedgemore, Brian


Khabra, Piara S
Sheldon, Rt Hon Robert


King, Ms Oona (Bethnal Green)
Skinner, Dennis


Kumar, Dr Ashok
Smith, Rt Hon Andrew (Oxford E)


Ladyman, Dr Stephen
Smith, Jacqui (Redditch)


Lawrence, Mrs Jackie
Smith, John (Glamorgan)


Laxton, Bob
Smith, Llew (Blaenau Gwent)





Soley, Clive
Vis, Dr Rudi


Southworth, Ms Helen
Walley, Ms Joan


Spellar, John
Ward, Ms Claire


Squire, Ms Rachel
Wareing, Robert N


Starkey, Dr Phyllis
White, Brian


Stevenson, George
Whitehead, Dr Alan


Stinchcombe, Paul
Wicks, Malcolm


Strang, Rt Hon Dr Gavin
Williams, Rt Hon Alan (Swansea W)


Sutcliffe, Gerry



Taylor, Rt Hon Mrs Ann (Dewsbury)
Williams, Alan W (E Carmarthen)



Winnick, David


Taylor, Ms Dari (Stockton S)
Winterton, Ms Rosie (Doncaster C)


Taylor, David (NW Leics)
Wood, Mike


Temple-Morris, Peter
Woodward, Shaun


Thomas, Gareth R (Harrow W)
Wright, Anthony D (Gt Yarmouth)


Thomas, Simon (Ceredigion)
Wright, Tony (Cannock)


Timms, Stephen
Wyatt, Derek


Touhig, Don



Trickett, Jon
Tellers for the Noes:


Twigg, Derek (Halton)
Mr. Graham Allen and


Tynan, Bill
Mr. Robert Ainsworth.

Question accordingly negatived.

New Clause 3

SECTION 309(1) OF THE INSOLVENCY ACT 1986 TO APPLY TO NOMINEES

'. The duty imposed on directors by Section 309(1) of the Companies Act 1985 to have regard to the interests of the company's employees shall apply to the nominee during his administration of the company.'.—[Mr. Mitchell.]

Brought up, and read the First time.

Mr. Austin Mitchell: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Mrs. Sylvia Heal): With this it will be convenient to discuss the following amendments: No. 46, in schedule 1, page 15, line 6, at end insert—
'and notify the registrar of companies, the company and any petitioning creditor of the company of the actual fees charged, the basis of the charges, the outcome of the moratorium and whether during the term of the moratorium he has been the subject of any adverse court judgment or disciplinary findings by any of the Recognised Supervisory Bodies.'.

No. 33, in page 20, line 20, at end insert—
'(5) The nominee shall have the power to apply to the court for directions to enable him to perform his duties under this paragraph.'.

No. 47, in page 21, line 45, at end insert—
'(c) on an application by any creditor, any member of the company or any other person affected by the moratorium.'.

No. 3, in schedule 2, page 35, line 47, at end insert—
'(ba) After subsection (4), there is inserted—
(4A) The supervisor shall owe a duty of care to the employees of the company and consult regularly with their representatives.".'.

Mr. Mitchell: The purpose of the new clause and associated amendments is to swing the balance in favour of workers and trade unions. The new clause would involve them more in the process of a company's 28-day moratorium, and outline their role in that process.
So far the debate has been like a class reunion of Standing Committee B. It is a shame that more Labour Members are not present, as by amending in little ways little measures such as this Bill we can swing the balance in


favour of the workers, the less well-off and the people who form the section of society that we represent. The vested interests always have people such as the Conservative Members present this afternoon who will speak for them and push their views and interests. It is important that we Labour Members use our influence to push the balance the other way when the opportunity arises.
It is as important for us to do that as it is for the Government to introduce major legislation. The Government tackle the big picture, and we Back Benchers tackle the small picture. That is what I want to try and do with these amendments. New clause 3 would impose on the nominee duties at present incumbent on the directors, to ensure that he attends to the same interest.
The Bill is right and worth pursuing. It is a minor measure, but it will be useful and will help to save companies. If we can get this measure in the interstices of the Government's legislative programme—as we can now, because the House is effectively ticking over, waiting for more messages to come from the Lords so we can get our teeth into the bigger issues—we should do so, and that is what we are doing. The Conservative party's critique that this is an unnecessary measure has no standing. However, if it is necessary, it is necessary to use it for the purposes of the people.
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The measure gives a new role to a vested interest—it creates a new role for insolvency practitioners. They have already been consulted on it extensively and they say that they want to be consulted more and to exert more influence on the processes and regulations when they are introduced. This is a Labour Government, however—it is not a Conservative Government, pandering to the vested interests. So when we have the legislative opportunity, we should use our role as a Labour Government to tilt the balance in the right direction. After all, for 18 years, it has been substantially tilted the other way. It is time to swing the balance back a little.
New clause 3 would impose responsibilities that are in the Companies Act 1985. Indeed, I was surprised to find them there. They were introduced to the Companies Act 1967. The surprising thing is that after the long years of Conservative Government, in which numerous Companies Acts were passed, almost year after year, as the previous Government changed their mind on these issues, these provisions were never removed. This is an important and potentially influential measure. The 1985 Act says:
The matters to which the directors of a company are to have regard in the performance of their functions include the interests of the company's employees in general…
That is a point of leverage which has been too little noticed and used. If the responsibility is incumbent on directors under the 1985 Act, it should also be incumbent on the nominee in the period when the nominee's decisions will effectively change the shape of the company. For example, decisions will be taken about shedding staff. Attempts to save a company, given present priorities, always seem to involve firing people and reducing the number of employees to save money. Decisions made by the nominee will thus affect the employees. In that case, why should they not have the same responsibilities as the directors who continue to run

the company and who should continue to exercise those responsibilities, but who are temporarily less powerful than the nominee?
A company is a team—it depends on its employees. It is a collective effort. We have to take a collective, communal view of a company. It does not consist simply of the directors and those in charge—everyone has an interest. The interests of the workers clearly lie in the company's survival. However, those interests get neglected in the vulture culture of insolvency and administration.
The whole process is a grab for money—the banks are the most powerful grabbers and play the most powerful role. They make so many loans, mortgages and floating charges, they have the necessary personnel and experience, so they will be the dominant influence. The workers are in a very weak position. They have a role as creditors; my hon. Friend the Minister will doubtless emphasise that as he did in Committee, because the workers may be owed wages.
I want to give the workers a role beyond that, as an integral part of the company, with an interest in its survival. They are stakeholders. I know that we do not talk so much about stakeholders now. Having discovered stakeholderism in the mid-1990s, we moved rapidly on to the third way. I am not sure what happened to the third way, but it has gone the way of all bright ideas. However, I think that the stakeholder philosophy is correct. Employees are stakeholders in the company; they have an interest in the company, and that should be taken into account.
The new clause is a comparatively diluted expression of that view, which amendment No. 3 develops more fully. It was well supported in Committee by both Labour and Liberal Democrat Members. I am not gifted with the killer instinct—something I have in common with the Prime Minister. I am too nice a guy and tend to think that one simply has to put the argument and the truth will prevail, a failing that spreads right across to Downing street. But had I the killer instinct, the Minister could have been beaten on this issue. I did not want to do that. The Minister undertook to look at the issue and see what he could do to incline the balance my way. I am sure that he has done that, and I am grateful to him.
I see from the posters going up around the country that it is now party policy to say "Thank you, thank you, thank you." As one of my constituents said, "What the hell for?" So I thank the Minister, but I was disappointed by the reply that he sent me when he exercised that function. He more or less advised me to go away in a fashion advised by French Connection UK. He said that it could not be done in the way that I wanted. I know what is happening here. The vested interests say, "We can't do that". The officials say, "Play it safe, Minister, there's no point in extending the role of the Bill. It will be a nuisance, it's another imponderable, it's not within the scope of the Bill which is simply concerned with matters of company administration and insolvency, so let us keep the focus on the main issue. Don't buy into emotive concepts like the workers or the stakeholders. Best say no—that's the easiest course."
I hope that, now I have approached the issue in a moderate form by proposing new clause 3, the Minister might look again at what he said in his letter. The nominee


is effectively making a life or death decision on the company and should have the same responsibilities as directors.

Mr. Butterfill: I have the disadvantage of not having served on the Standing Committee although, together with my hon. Friends on the Select Committee, I considered a number of these issues. The effect of the amendment is not entirely clear, and perhaps when the Minister replies it will become a little clearer. At present, the directors and, indeed, the officers of the company have personal liability under certain circumstances for malfeasance and can be sued individually. Is the hon. Gentleman intending to pass on to the nominee a similar liability vis-à-vis his duties in the particular connection that he proposes? If so, does he think that it will be easy to find a nominee under those circumstances?

Mr. Mitchell: It is good to hear the voice of the vested interests again expressed here, even if it did not get on to the Committee. The answer is that the directors have that responsibility, but they are also responsible for having regard to the interests of the company's employees in general. They have both responsibilities. They continue to be in charge of the company during this period. I want the nominee to be impressed with the same responsibility. It is fairly simple. It does not detract from the directors—they have the responsibility too. The new clause would spread the responsibility to the nominee.

Mr. Butterfill: rose—

Mr. Mitchell: No, I do not want to give way again, because the tear-jerking picture of directors at risk will be paraded before us. I simply want the responsibility that directors have to employees to be shared. I am not going to get bogged down in that argument.

Mr. Butterfill: Will the hon. Gentleman give way?

Mr. Mitchell: No. I am sorry, but I am moving on.

Mr. Butterfill: rose—

Madam Deputy Speaker: Order. The hon. Member for Great Grimsby (Mr. Mitchell) has said that he will not give way.

Mr. Butterfill: On a point of order, Madam Deputy Speaker. The hon. Gentleman has publicly accused me of representing a vested interest in the Bill. I want him to tell the House what vested interest he thinks I represent.

Mr. Mitchell: The hon. Gentleman may be somewhat sympathetic to the interests of directors. He paints that picture of directors at risk, giving the impression that the risk would be increased if the nominee shared the same responsibilities and had to pay attention to the workers' interests. That is why I accused him of pushing a vested or a sectional interest—that of the directors. I am speaking for the interests of the employees. I do not want to go further down that road—I did not want to give way in the first place, but I did so out of courtesy. The point was largely irrelevant, but it has been answered.
Amendment No. 46 is designed to ensure that the nominee is accountable to directors and the public. At present, the Bill only requires the nominee to inform the court when the moratorium has been brought to an end. It does not require the public filing of information on matters that have to be disclosed.
The Bill would extend what amounts to a state-guaranteed market for insolvency and business restructuring, to the benefit of insolvency practitioners. They have that privilege and it should be accompanied by an accountability requirement. That is what I am trying to impose in amendment No. 46.
Amendment No. 47 would bring paragraphs 26 and 28 of schedule 1 into alignment with each other. The Bill does not recognise that creditors, members of companies and other stakeholders have the right to ask the courts to seek a replacement of the nominee. Under paragraph 26, they can apply to the court if they are dissatisfied with what is going on, but they do not have the power that is given to the directors in paragraph 28 to have the nominee replaced. Those powers should be equal. The amendment would bring paragraphs 28 and 26 into line by extending the power to any creditor, member of the company or other person affected by the moratorium. That seems to be a balanced requirement.
Amendment No. 3 is the nub of my argument on Report, as it was in Committee. We should impose on the nominee a duty of care to the employees of the company. Why does the Bill not impose that duty—to have regard to the interests of employees when making decisions? As the Bill stands, only the interests of creditors are promoted and protected. We are a Parliament that is elected by the people for all the people. We should enact legislation that benefits as many people as possible—not merely the minority covered by these procedures.
I proposed a similar amendment in Committee. The Minister's response was that he was not keen to change the legislation and to recognise the rights of employees, which I regret. Where we have the power to do so, we should. My hon. Friend also stated that an employee's position is no different from that of any other creditor. Most employees will be creditors and, in that capacity, they can make representations to the nominee and even go to court. The response that they are merely creditors is flawed. Creditors' committee meetings are dominated by the major creditors, which usually means the bank and the insolvency practitioner. Working together, they dominate the proceedings and other people do not get a look-in. A nominee needs to be expressly instructed in legislation to ensure that employee interests are not overlooked. That is the duty of care imposed in the amendment.
4.15 pm
I recall in Committee the touching picture painted of workers at Sturmey Archer by my hon. Friend the Member for Nottingham, South (Mr. Simpson) who has put his name to amendment No. 3. He talked of their difficulties in understanding what was going on and getting representation. Let us give the nominee a duty of care.
The Minister has replied that employees are creditors and, as such, have rights. I am seeking recognition of their rights as employees, not as creditors. After all, it is the blood, sweat, muscles and brawn of workers that keep the company going. Without that human capital, no business


will survive. At the restructuring of the company, matters that are crucial to all have to be decided—pension rights, jobs, wage levels, security and all the things that go with a job. Those matters cannot be discussed without the employees or their representatives being involved—if they have a trade union to do it, I am happy with that because a trade union will always represent the interests of the employees.
Directors have a responsibility to attend to the interests of employees and that should be the nominee's responsibility too. All those rights should be respected in business. In this legislation, we have the opportunity to ensure that those rights are protected and to incline the balance to the workers. It is not an onerous imposition or a radical restructuring of the Bill. It is merely saying that in the vulture culture, when all the creditors move in and everyone is grabbing, either to keep the company going or to close it down—grabbing for the assets and getting the best deal for themselves—someone should pay attention to the interests of the workers and have a duty of care to them. Someone should involve their representatives in the discussions.
We are in power and we are a Labour party. This is the party of the workers and the trade unions. We should incline the balance to them by the simple procedure of a duty of care. In the new clause, I have modified the provision and toned it down so as not to frighten the Minister or his advisers. The full-blooded statement is in amendment No. 3, and either would be suitable—obviously, I prefer the amendment. I cannot see why the Minister cannot leap to his feet and say, "Yes. I've seen the light. This is the responsibility of a Labour Minister. Let us have new clause 3."

Mr. Page: I will speak to amendment No. 33, but before I do so, I will deal briefly with some of the comments of the hon. Member for Great Grimsby (Mr. Mitchell). His new clause has merit and I hope that the Minister will not be as hard-hearted and dismissive as he was in Committee. I hope that he will try to understand that the workers in a company have rights and responsibilities, and that a Labour Government should be looking after them, not casting them to one side.
The hon. Member for Great Grimsby accused Conservative Members of blowing hot and cold. If we agree with the hon. Gentleman, we are right, but if we introduce the slightest balance, we are wrong and we are promoting vested interests. The attack on my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) was unjustified, unwarranted and without any evidence. That is typical of the way in which the hon. Member for Great Grimsby—with great humour, and most amusingly—shoots from the hip.

Sir Sydney Chapman: In fairness to the House, if an hon. Member states that another hon. Member has a vested interest, it is incumbent on the hon. Member making that assertion to say exactly what those vested interests are. It is not necessarily wrong to have a vested interest—it all depends on the import one gives to the word "vested". Does my hon. Friend agree that our

principal duty is not to support one sectional or vested interest against another, but to ensure that our legislation is fair?

Mr. Page: My hon. Friend makes the point that I was trying to make: we should introduce balance in whatever we say. I certainly would never accuse a Labour Member of representing the vested interests of a trade union. Why should a Member not represent such interests? That is part of the great spread of diverse interests represented in the House; we hear a variety of views and can form a judgment. From such a balance, we can come to the best decision for the people of this country. That is why we are sent to this place.
I resent being lumped in under the term "vested interest". I remind the hon. Member for Great Grimsby that I introduced a ten-minute Bill that proposed splitting responsibilities: someone involved in the valuation of a company should not be allowed to carry out the liquidation. I think that the hon. Gentleman agreed with me—he praised me for that proposal—but now he lines me up with the vested interests against which he obviously has a vendetta. He would do more for everybody and do it better if he balanced his words more carefully, and thought before shooting from the hip.
When one disagrees with the legislation under discussion, it is a standing temptation to regard it as coming from cloud cuckoo land. That seems odd to me, as according to the Greek play by Aristophanes, the laws of logic applied more rigorously in cloud cuckoo land than they did on earth, but I use the term in its currently accepted sense when I apply it to this aspect of the Bill.

Dr. Howells: I am slightly confused as to whether the hon. Gentleman thinks that the Bill or the amendment comes from cloud cuckoo land.

Mr. Page: The Minister will have the opportunity later to tell me that my amendment comes from cloud cuckoo land; I was saying that the balance in this part of the Bill comes from there.
I should like to be able to say that the Bill's provisions for applying to the courts were entirely logical and straightforward. Creditors can apply, as can directors and anyone affected by the moratorium—including the company; so can liquidators, administrators, shareholders and the supervisors of voluntary agreements, but not the nominee.
Nominees will have responsibility for assessing whether voluntary arrangements proposed by a company's directors are likely to be approved and implemented—the kernel of the Bill. Such nominees will also have to come to a view on whether the voluntary arrangements are likely to be improved without modification, or whether they might fail. Those are huge and important responsibilities.
With great respect to the Minister, it is for this House and the other place to decide whether a nominee should have the right to apply to the courts when he or she may need guidance on the performance of his or her duties. If his or her decisions can be challenged in the courts by the parties I mentioned, surely it is fair and equitable to afford the nominee an equal opportunity to exercise that right.
The purpose of the amendment is not to give nominees an escape clause so that they can evade their responsibilities and under which courts would take over


those administrative and commercial decisions. I suspect that the Minister's opposition to the amendment is based on Mr. Justice Neuberger's decision—as though he and not Parliament ran the country. Although I have enormous respect for Mr. Justice Neuberger, it is not for him to decide whether nominees, or any insolvency holder, should have the right to apply to the court when in doubt about the decision that should be made; it is for Parliament to decide whether nominees should have that right. If we decide that they should have such a right, judges should respect that—unless, of course, the matter involves human rights issues.
At present, everyone involved in the whole chain of events—except the nominee—can apply to the court. Yet the nominee has to make that crucial decision that will bring the moratorium into effect, or will continue it. At times such a decision can be extremely difficult, especially if the nominee forms the view that the original voluntary arrangement will not be approved, but is likely to be approved with modifications proposed by a creditor.
The proposed procedure is novel—it does not take a tried and trusted path; the company could obtain a moratorium by applying to an authorised person rather than to a judge. The difficult decisions that were made by judges will be made by authorised persons. In Committee, we were all fully aware of how many times the Minister was asked to explain by which route the nominees might appear. In a rare show of comradeship with the hon. Member for Great Grimsby, I acknowledge his excellent and valid point about the number of organisations that could license practitioners. The measure would add yet another one, but in a rather vague and nebulous form—appearing from the ether or through some osmotic process, an organisation would be approved by the Secretary of State and could then approve a nominee.
We should proceed along that route with caution. I must not say that the Minister has been sloppy, but he has only made vague and conciliatory noises about what a future nominee might be like—hard facts and detail are lacking.
Those authorised persons do not have to hold the same qualifications as a licensed insolvency practitioner. We are well aware of the views of the hon. Member for Great Grimsby on those gentlemen. It is important that the Secretary of State should ensure that if he creates even more bodies that can grant approval to carry out such work, they should be of a standard and quality that will be a help rather than a hindrance.
During proceedings on the measure, we frequently made the critical comment that it is half a Bill, or even less than half a Bill. It would have been an ideal measure under which to introduce monitoring or quality control of the operations of insolvency practitioners. But no such provisions were included. The issue certainly occupied the time of one member of the Committee. He made his argument forcibly and we were all made aware of what he was trying to achieve. The House will have gathered that I refer to the hon. Member for Great Grimsby.
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Just as there are rogue directors—although the vast majority of directors are decent people who work hard to the best of their ability—so too there are licensed practitioners who do not behave appropriately, but the majority do a good job.
I was pleased to hear from the new named body of licensed practitioners—the Association of British Recovery Professionals—that its title includes the word "recovery". I recently received, as did every member of the Committee, a letter from that body, saying that the word "recovery" is now very much in the forefront of its thinking. That is a change of emphasis and direction, which I am sure we all welcomed.
If the Bill does nothing more than to introduce the culture of rescue and recovery earlier in the process, it will have achieved something. Too many businesses run right to the wire, when they could have been saved if they had taken decisions earlier. In the United States an eminent gentleman—so eminent that his name escapes me—conducted research and discovered that if a company had taken slightly earlier the measures that it took in the last six months of its existence, it would have been rescued. Too many directors do nothing until the cliff edge is crumbling beneath their feet, and by then it is far too late—too late for moratoriums or any form of rescue. If any message is to be conveyed from this place to company directors, I hope that it will be my strong encouragement to seek advice and help earlier, instead of bottling things up and thinking that they can work their way out of their difficulties. In so many cases, neither success nor rescue comes, and the inevitable pain of bankruptcy follows.
I return to my comments about the fear that the authorised person will not be of sufficient quality. I do worry that a number of authorised persons will be out of their depth, so to my mind it would be bizarre and pointless to deny them the right to appeal to the court. What conceivable advantage can there be in denying the nominee such an opportunity? If he applies to the court unnecessarily, wasting the court's time, the court's displeasure will no doubt be exhibited and reflected in an appropriate order for costs, but it cannot be right to deny the nominee the right to apply to a court when he has a real need for guidance.
I urge the Government to reconsider the amendment.

Mr. Burnett: I shall speak to new clause 3 and amendment No. 46.
I was delighted to hear the speech by the hon. Member for South-West Hertfordshire (Mr. Page) because I believe that there is very significant support in all parts of the House for new clause 3. It is not draconian. We are talking about duties that are already imposed on directors. They are not onerous.
Let us read what the new clause says. It imposes the burden of section 309(1) of the Companies Act 1985 on nominees—and why should nominees not have regard to the interests of the company's employees? The new clause is pretty tame, and not onerous. It merely provides that the nominee should at least consider the interests of the company's employees.

Dr. Howells: rose—

Mr. Burnett: I am happy to give way to the Minister.

Dr. Howells: Will the hon. Gentleman concede that the intent of the Bill is to offer some companies the opportunity


to survive and to continue trading, and therefore to help employment? The whole point of the Bill is to offer support for employees, because without it, they will not have jobs.

Mr. Burnett: I entirely agree that the object of the exercise is to promote the rescue culture. We have in this country a particularly creditor-friendly business culture. I believe that all hon. Members who served on the Committee, from whatever party they came, recognised that. If the moratorium has the effect of keeping a company in existence, that is marvellous, but in taking his or her decisions, the nominee should at least have regard to the interests of the company's employees. That is not an onerous provision. Nominees must consider such matters. They may disregard them, but they must at least consider the number of employees in the company, whether the company should contract and whether people should be sacked. They should at least give those matters some weight. That is all that the new clause would provide. In my view, it is entirely correct. The employees have invested their time and efforts in the company and been loyal to it, and their interests should at least be considered.
Amendment No. 46 is not draconian or onerous in the slightest. At present, insolvency practitioners have almost carte blanche to charge what they like. There is little scope for those fees to be taxed or challenged, and that is deeply unfair to directors, employees and creditors—particularly unsecured creditors.
The hon. Member for Great Grimsby (Mr. Mitchell) is not the only hon. Member who has highlighted that unfairness. Two or three years ago, no less a Member than the right hon. Member for Maidstone and The Weald (Miss Widdecombe) initiated an Adjournment debate on the subject. The amendment is a small step in the right direction. Fees and other matters should be reported to the Registrar of Companies. I hope that when the Minister replies to the debate, he will tell us what he hopes to do and what provision his Department proposes to make to remedy this and other defects in the legislation, which were highlighted from both sides of the Committee.

Mr. Brian White: I have a great deal of sympathy for the amendments tabled by my hon. Friend the Member for Great Grimsby (Mr. Mitchell). I suspect that I could have a long discussion with him about the things for which his constituents should be thankful to the Government—not least the national minimum wage—but I shall leave that for now.
In Committee an awful lot of examples were cited of the type of problems that the amendments would address and the Minister expressed some sympathy for the points that were raised. We should remember that the Bill deals with small companies, and that the period when discussions are held about whether to impose a moratorium is often traumatic for employees—it is probably the most stressful time of their lives. As the hon. Member for South-West Hertfordshire (Mr. Page) put it, a decision taken early can save jobs.
I shall be interested to hear the Minister's reply, because one thing that concerns me about the Government's unwillingness to accept the amendments is that, as I

understand it, the Minister's argument in Committee was that employees are creditors and so are protected because they are part of the creditors' meeting. He argued that if they are not creditors, they are just normal employees and are protected by the directors. My worry is that the influence of the nominee in overriding the directors' wishes or suggesting to directors that they should go in a slightly different direction will be at variance with the interests of employees and key personnel. It is not unknown for key personnel, especially of small IT companies, to be poached and to move to other companies. There are several such key issues that the creditors' meeting would not address which would be crucial to the nominee's administration and the way in which the directors operate the company during the moratorium.
If the nominee does not have a duty of care to employees, I fear that the directors will say, "Of course, we would like to look after you, but this nasty nominee is telling us to do something different." Because of the relationship between the nominee and the directors, the terms and conditions of employees could be directly affected by decisions that they cannot influence.
My hon. Friend the Minister seems to rely greatly on the fact that employees will receive protection as creditors, but there are other concerns that he did not address in Committee.

Mr. Burnett: We considered two particular points in Committee. The first was the duty of nominees to creditors and the second was whether an employee was likely to be a creditor. In fact, he or she will almost certainly be a creditor. Therefore, does the hon. Gentleman agree that new clause 3 at least provides for the interests of a company's employees to be regarded by the nominee during the moratorium?

Mr. White: That is why I have some sympathy for the new clause and shall be interested to hear my hon. Friend's comments. The emphasis in the Committee was on the employees' role as creditors, but the issue goes beyond that. If we do not consider the problem fully, the Bill may not achieve its aims of saving people's jobs and giving them hope by providing a breathing space. If there is a simple duty of care on the nominee, different decisions may be taken and that may secure the employment of the people in the company concerned.

Mr. Butterfill: The House owes a debt of gratitude to the hon. Member for Great Grimsby (Mr. Mitchell) for bringing this matter to its attention. New clause 3 and amendment No. 46 deserve serious consideration. Like the hon. Member for Milton Keynes, North-East (Mr. White), I am minded to support amendment No. 46, but I am not entirely clear about how the new clause will function. I shall listen to the Minister's considered reply before I make up my mind. In principle, the idea that there should be a duty to look after the interests of employees should be accepted by all reasonable people.

Mr. Burnett: I hope that the hon. Gentleman will accept that the provision in new clause 3 is not as strong as that—it is a pretty tame proposal. It would be a requirement not to look after the interests of employees but to have regard to them.

Mr. Butterfill: The hon. Gentleman has an advantage over me on this, because he is a qualified lawyer with experience of the legal niceties. However, I shall listen to the Minister before I finally make up my mind.

Mr. Page: My hon. Friend, who was savaged earlier by the hon. Member for Great Grimsby (Mr. Mitchell), is showing his true colours by considering the matter dispassionately. Does he not agree that employees would be best served by amendment No. 46? If the Registrar of Companies is notified of the fees charged, the basis of the charge and the terms and outcome of the moratorium, there is more chance—if things go wrong—of money being recovered to pay creditors and employees. Will that not give those in the company a better chance of receiving something if, sadly, the moratorium does not work?

Mr. Butterfill: I have already said that I support amendment No. 46. It is admirable and will go a long way to dealing with some of the rare but considerable abuses that take place from time to time when companies go into liquidation.
4.45 pm
I have been nice about the hon. Member for Great Grimsby, but I was a little disappointed when he did not follow the best traditions of the House and did not allow me to intervene when he was rather rude and accused me of defending vested interests. My interests are fully declared in the Register of Members' Interests. I have two small directorships of family companies that do not have any employees other than the directors themselves. Therefore, I have no interest to defend in that respect. I have already talked about my experience as a non-executive director of Maples.
The hon. Gentleman seeks to include in the Bill provisions from the Companies Act 1985, which was passed by a Conservative Administration. If this Bill is passed, in the event of a liquidation, the nominee will have a duty to consider the interests of all those concerned. That is important. The hon. Gentleman referred to vultures, but they may be defending the interests of customers. For example in the case of Maples, our constituents—many of them pensioners—might have put down a £1,000 deposit on a three-piece suite, which would represent a huge purchase for them. Suddenly, the company went bust and they wanted their money back. Customers are also entitled to consideration, and it is always extremely difficult to balance the different interests and to treat everyone even-handedly and fairly, particularly if one knows that not everyone will be paid in full. On reflection, I am sure that the hon. Gentleman would agree with that.
I have just voted for a new clause that would have helped to prevent the abuses that have occurred in some companies. I am disappointed that the hon. Gentleman did not support it, and he may recall that the Insolvency Act 1993 started as a private Member's Bill that I promoted. It protected the innocent purchasers of property that could be seized by a receiver or a liquidator. I changed the law to defend innocent purchasers from those that the hon. Gentleman describes as vultures. I do not apologise for my record on this issue.
The general theme of this group of amendments is the nominee's supervisory activity in relation to the moratorium. Unfortunately, I am the only contributor to the debate who did not serve on the Standing Committee, but I served on the Select Committee that considered the draft Bill. Therefore, I wish to point out the respects in which the Government have failed to meet the concerns that the Select Committee expressed.
One of the dangers is that nominees could face a conflict of interest. They will be invited by the directors to take up a paid position and a few in the profession—I hope not many—might think that it is worth taking such a rewarded post even if they think that a company does not have much chance of surviving. That would be regrettable, but the Government have failed to include in the Bill one of the defences that the Select Committee drew to its attention. If the directors of a company fail to attract the person that they want as nominee because he does not think that the company will survive, they may go to as many as 20 people to trawl for a nominee. Eventually, they may find a person who is sufficiently self-motivated to do the job.
The Select Committee suggested that the Government should include a defence against trawling, but they signally failed to do so. Perhaps the Minister will tell us why. Equally, the Government are changing the requirement for qualifications of nominees. That again exacerbates the danger. Up to now, only qualified insolvency practitioners have been able to fulfil that role, but the Bill will allow anyone with an appropriate qualification or who is a member of a recognised professional body to fulfil the task.
Plenty of people, such as certified accountants and chartered accountants, are members of appropriate professional bodies. Although they might be good accountants and produce good audits, they might have no experience of the specialised subject of insolvency. Again, the Select Committee made it clear that it was concerned that the Government were considering involving such people. A broad spectrum of people made representations to the Committee, and many of them expressed the same concerns. The Select Committee concluded that it might have been better if the Government had left this particular change to the wider review of the whole issue of insolvency.
We are all—I hope—interested in protecting every section of the public, including, as the hon. Member for Great Grimsby said, employees, but that must be even-handed, transparent and above all fair.

Dr. Howells: I shall deal first with amendment No. 3 and new clause 3 in the name of my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
The amendment seeks to place on a nominee and a supervisor a duty of care to employees. However, I am not sure that my hon. Friend appreciates that it would place a duty of care on a supervisor only under the existing voluntary arrangement procedure—that is, without the moratorium. It is also not at all clear whether the proposed duty on a nominee is to apply in both moratorium and non-moratorium cases. Either way, I believe that neither the new clause nor the amendment is necessary.
The first part of the amendment would provide for the supervisor to owe employees a duty of care in the existing voluntary arrangement procedure but, as I have said, that is not necessary. Section 7(3) of the Insolvency Act 1986 provides:
If any of the company's creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court.
Therefore, if employees have concerns about the way in which the supervisor is acting, the 1986 Act already provides them with the ability to challenge the actions of the supervisor by seeking an appropriate order.
New clause 3 is not necessary either. Paragraph 26 of proposed new schedule Al similarly allows
any other person affected by a moratorium
to apply to the court if he is dissatisfied by any act, omission or decision of the nominee.

Mr. Burnett: Why should employees have to bother to apply to the court? Will the Minister concede that we are not proposing an onerous duty?

Dr. Howells: A proper procedure must be followed. I shall expand on this matter when I address the important issues raised by the hon. Member for Bournemouth, West (Mr. Butterfill), who spoke about redressing the balance in the way in which the case is presented. That is an important issue. I know from the many cases that arrive on my desk from the companies investigation team at the Department of Trade and Industry that we cannot blind ourselves to the truth that there are many sharp directors who are prepared to fleece creditors, some of whom are pensioners who might have used their savings to put down a deposit on a three-piece suite, as the hon. Gentleman said. We must take into account all stakeholders, not just employees.
I think that my hon. Friend the Member for Great Grimsby might have misunderstood the function of the supervisor and the nominees in a moratorium case. Neither will assume control of the company. I have said that a number of times, but hon. Members have not taken it on board. The purpose of the supervisor will be to perform the duties as set out for him in the voluntary arrangement. The nominee's role during the moratorium is set out clearly in proposed new schedule 1A.
The directors will remain in charge of the company both during and after the moratorium. We therefore do not consider it appropriate to include a provision in the Bill that imposes such an undefined duty of care on a supervisor. Nor do we think it right that he should have to consult employees' representatives or that nominees should be subject to the duty imposed in section 309 of the Companies Act 1985. That section, which is headed
Directors to have regard to interests of employees,
states:
Accordingly, the duty imposed by this section on the directors is owed by them to the company (and the company alone) and is enforceable in the same way as any other fiduciary duty owed to a company by its directors.

We must remember that the directors are still in charge of a company in a moratorium, and section 309 continues to apply. Therefore, they should have regard to that duty when framing a rescue plan. That is my point which, for whatever reason, my hon. Friends do not want to accept.

Mr. White: Many examples were given in Committee of employees whose directors did not act in the way outlined by the Minister. Will he undertake to ensure that, for the purposes of this Bill, that duty will be publicised clearly so that people who go into voluntary arrangements understand it?

Dr. Howells: I readily concede that successive Governments have done a bad job in making employees aware of their rights in such circumstances, but it is clear from section 309 that those rights are already enshrined in law. Far too often, trade unions do not take sufficient notice of them and employees do not know about them. I am not so worried about employees who are represented by trade unions, but about non-union, low-paid shop workers because those people do not have the confidence or the knowledge to use what is available. That is the problem. My hon. Friend the Member for Milton Keynes, North-East (Mr. White) is right to say that we have a real job to do to educate people.

Mr. Burnett: We are not talking about directors—we know that they must comply with section 309(1). I hope that the Minister will direct his attention to the fact that new clause 3 would impose on a nominee the very small burden of having to have regard to the interests of the company's employees.

Dr. Howells: I have tried already to respond to that point. I have said that it is an unnecessary burden, and I believe just that.
My hon. Friend the Member for Great Grimsby said in Committee that he was looking for a way of ensuring that employees' interests were included in the equation. He will understand that supervisors and nominees will be aware that employees are able to make application under section 7(3) or paragraph 24, and should take that right into account when performing their duties. Additionally, supervisors and nominees will be aware that if they act in such a way as to give rise to a course of action—such as in tort—they will be vulnerable to legal action, and they would have to take that into account too.
On amendment No. 3, given the supervisor's function, it would be inappropriate for him to have regularly to consult employees' representatives. However, if an employee happened also to be a creditor, the supervisor would keep him informed of progress in the same way as he would other creditors.
I think that my hon. Friend the Member for Great Grimsby referred to amendment No. 47 after dealing with new clause 3 and amendment No. 3. It is a similar amendment to one that he tabled in Committee. Like that one, I believe that amendment No. 47 is unnecessary. First, it is not necessary for any creditor or any member of the company to be able to make such an application. If he or she is not happy with the existing nominee, they can vote to change the nominee at the meeting summoned under paragraph 29 of schedule A1. That can be achieved by proposing that it be a condition of any extension of the


moratorium that the nominee be replaced. I hope that the House accepts that. Alternatively, it can be proposed that the nominee be changed by amending the voluntary arrangement proposal considered by the meeting. It would be up to the meeting to pass such a proposal. We do not consider it appropriate that anyone should be able to apply to the court to change the nominee. The right contained in paragraph 28 to make application to the court to replace the nominee is designed to deal with specific circumstances.
5 pm
The hon. Member for Bournemouth, West raised an extremely important point. I have said that I see far too many cases of shysters fleecing those whom we refer to as creditors. I know that my hon. Friend the Member for Great Grimsby knows about those cases. I had one recently that received much publicity. It involved the World of Leather, where extremely dubious practices were carried on in the last few weeks of trading.
Constituents were affected throughout the country and there were some sad results. Many people did not get their money back and they did not get their three-piece suites. They are creditors—it is not only the big banks that are creditors, along with the circulating vultures, as my hon. Friend referred to them. I know of elderly and poor people who saved up for three-piece suites and did not get them. We must remember that the process is designed to protect those people, as much as it is designed to ensure fair play in every other respect. We are offering a period of respite for companies when they feel that they are in trouble. Perhaps the Bill will significantly add to that rescue culture.
The hon. Member for Bournemouth, West asked whether directors will be encouraged to shop around for a nominee until they find one who is prepared to sign the necessary statement. His intervention was tantamount to that. The likelihood is that in practice they will not have time to do that. We should bear that in mind. However, there seems no good reason why directors should not be able to test the market.
In the early days of consideration of the Bill in Committee, there was much discussion about the enormous fees that are charged by insolvency practitioners. Many allegations were made by my hon. Friend the Member for Great Grimsby and others about dubious practices concerning fee setting and levels of fees. Perhaps the Bill will go some way towards breaking that monopoly.

Mr. Butterfill: It is not that I have any concern about people shopping around to get the best fee. That is entirely admirable. I am worried that if they shop around and are repeatedly turned down because experienced professionals say that there is no hope of their acting as nominees, they will eventually find someone who for self-interest—that of earning a few quid—will say, "Yes, I'll do it." That point, which the Government have not addressed, was addressed by the Select Committee.

Dr. Howells: I shall try to convince the hon. Gentleman that we have addressed it and that we are concerned.
As the hon. Gentleman says, some nominees might be more rescue-oriented than others for many reasons, good as well as bad. We know that there is a flip side to

the coin. There are some professionals who are notoriously not interested in rescues, whereas there are others who generally are. It could work both ways. Any prospective nominee should be up to the standard expected of him. There is no question about that. That goes to the point made by the hon. Member for South-West Hertfordshire (Mr. Page). I believe that they will be up to the proper standard because they will be authorised and regulated by a body recognised by the Secretary of State for that purpose. However, if needed, in the unlikely event of a director being able to pull the wool over a nominee's eyes, various remedies are available in schedule A1 to address the abuse. Not the least of those is the offence contained in paragraph 40, which provides for the punishment of those who make false representations and the like to obtain a moratorium.
Those of us who have previously been involved with the Bill are accustomed to hearing my hon. Friend the Member for Great Grimsby talk about the importance of public accountability of insolvency practitioners, and he is right to highlight that. However, in amendment No. 46, he is again talking about fees. I am glad that he wants to discuss fees, which are an important subject and one that is obviously dear to his heart—but the fact is that the Bill is not about the regulation of practitioners' fees.
At issue is the requirement on the nominee to give notice of the end of a moratorium. That requirement can arise for two reasons, among others: first, because the moratorium has come to an end without a voluntary arrangement being agreed; and, secondly, when an arrangement has taken effect following the meetings of a company and its creditors. In the first instance, the question of payment of the nominee's fees will be a matter for the company and its directors, not anyone else, to deal with. In the second instance, the nominee's fees will be a matter for the meetings to consider when voting on whether or not to accept the voluntary arrangement. What the nominee is to be paid is a matter that must be included in a voluntary arrangement, under rule 1.3 of the existing company voluntary arrangement procedure, and we intend that a similar provision should apply to the new moratorium procedure.
My hon. Friend should also take comfort from paragraph 32 of the new schedule, which sets out that, if a meeting proposes to extend the moratorium, the nominee has to inform the meeting of the costs of his monitoring activity up to that point and what he intends to do in that respect during the proposed extension. Therefore, anticipated costs will have to be approved if the moratorium is not to end. In those circumstances, I consider it to be neither necessary nor appropriate for the nominee to have to give the notice set out in amendment No. 46 regarding his fees.
My hon. Friend also desires the nominee to have to notify various individuals of
any adverse court judgment or disciplinary findings by any of the Recognised Supervisory Bodies.
I do not consider that to be appropriate to the Bill, which my hon. Friend described in Committee as a very modest measure. Such issues have nothing to do with a moratorium and, as I have said before, practitioner regulation is not a matter for the Bill.
The hon. Member for South-West Hertfordshire spoke to amendment No. 33, which is identical to one that he tabled in Committee. For the benefit of those who have


not had a chance to read Hansard, I repeat that we do not consider it necessary to provide the nominee with the power to apply to the court for directions. The nature of the nominee's role is such that he should not be in a position in which such an application would be appropriate. Commercial and administrative decisions are for the nominee, not for the court. We do not consider that the court should be used to provide the nominee with a way in which to avoid taking decisions that are, rightly, for him, or to enable him to obtain the court's endorsement of his intended course of action.
I look to Mr. Justice Neuberger for neither direction nor support, but the hon. Member for South-West Hertfordshire is correct to say that I take a great deal of comfort from Mr. Justice Neuberger' s ruling in the case of T and D Industries plc and another, relating to a company that was the subject of an administration order.
Having made those points, I hope that my hon. Friend the Member for Great Grimsby will withdraw his amendment and that the others will not be pressed.

Mr. Mitchell: I should make a couple of points before coming to my agonising decision about whether to keep the House on tenterhooks by pressing the matter to a Division.
In answer to my hon. Friend the Member for Milton Keynes, North-East (Mr. White), may I say that I was not neglecting the big things that the Labour Government are doing: they are important and the Government are successful. What I said was that, as Back-Benchers, we have a little influence on legislation affecting the way in which companies are run, insolvencies administered and companies rescued, and we should use that opportunity to tilt the balance towards our section of society and the workers. We have only a little influence but we can do much to improve society through little changes to legislation. That seems to me to be the responsibility of the Back Bencher. We do not get much responsibility, for heaven's sake; we should use what we have.
I did not want to take the question from the hon. Member for Bournemouth, West (Mr. Butterfill) because I did not want to go down that legalistic path. If the hon. Gentleman understood me to say that he represented vested interests or, worse still, that he was one of the vultures I was criticising, I correct that impression and apologise. I was not saying that.
The hon. Gentleman was asserting the primacy of company directors by pointing out their legal responsibilities—to the detriment of the workers, I thought. My sole point was about the need to swing the balance towards the workers.

Mr. Butterfill: rose—

Mr. Mitchell: No, I will not give way.
I make no correction on the vulture culture. In too many cases the interests of the banks is predominant, and in the scrabble over the money, the banks have enormous power. I know that there are tear-jerking pictures of people all over the country who are owed small sums by fraudulent companies, but that is not what we are discussing.
Through the Bill, we are trying to instil the rescue culture, to keep companies going. The power of the vultures to close companies down and to call in debt,

in the unpredictable, lurching way in which banks do that, needs to be checked. All that I am trying to do is to tilt the balance towards the workers. After all, we are the Labour party still, I think. We are a party of stakeholders, and voice the interests of stakeholders. We work in a European context, and workers' rights are properly advanced by all the proposals coming out of Europe—something that I strongly support. We have an opportunity, so why are we not doing what we can and should do?
The trade unionists to whom I have spoken and with whom I formulated the amendments think that we will do so, but I am disappointed to find that my hon. Friend the Minister does not consider that necessary. I do not accept the argument that workers can apply to the courts. That is not part of their repertoire or expertise, and it should not be necessary if we write their primacy into legislation. I am not asking for the interests of the employees alone to be taken into consideration. I am asking for them to be taken into consideration, but not as the predominant influence.

Dr. Howells: I thank my hon. Friend for giving way. I am sure that he did not mean that it is not for workers or trade unions to take these matters to court. Many of the great advances that have been made by trade unions and workers have been made in court, as a result of brilliant advocacy. Even I am old enough to remember some of it, and I have witnessed it first-hand. I am sure that my hon. Friend does not mean what he just said.

Mr. Mitchell: I wish that I could speak Welsh, rather than the simple verities of Yorkshire—pure language of the people of the north. I was not saying that at all. I said that applying to the courts was not part of workers' expertise. Certainly, they need backing and support from the trade unions, and the trade unions provide it. We can encourage them to provide more of it. If the rights of workers have been trampled on, it is the responsibility of the trade unions to help them to go to court, but in some cases workers are not members of trade unions. The courts are an uncertain way of making progress, and we could make progress in the matter by simply writing into the Bill the requirement of a duty of care to the workers. That is all I ask.
I do not see why my hon. Friend is so adamant. I know that he has received advice to the effect that that would be a nuisance, would complicate matters and might lead to unforeseen consequences. I believe that it would set the tone for the entire procedure. My hon. Friend has turned down the idea and I am disappointed by his reply. It seems to me that as he is the Minister of social and corporate responsibility and as such issues are raised in that context, appropriate provisions should be included in the Bill.
5.15 pm
I was excited by the tumultuous support that I received from the other side of the House—Conservative Members are clamouring to support my proposal—but it puts me in an embarrassing situation. I would like to lead the Liberals and the Conservatives to the barricades and shout, "What about the workers?"

Mr. Page: After the hon. Gentleman's dramatic words at the start of our debate, is he now saying that he will not press the new clause to a vote and will back off? Surely not!

Mr. Mitchell: When I used the word "tumultuous" I was referring not to the hon. Gentleman's speech, but


to the widespread support I received from Opposition Members. I was delighted by their support—that shows that they have learned something after failing the workers for 18 years. I am disappointed by the lack of support among Labour Members, especially from the Minister, and I am now in an embarrassing position. Neither of my two co-authors of the new clause could be present for the debate. In light of that, I give up. I did not push the matter in Committee because of a lack of killer instinct. With a feeling of sad impotence, I beg to ask leave to withdraw the motion.

Hon. Members: No.

Question put, That the clause be read a Second time:—

The House divided: Ayes 42, Noes 280.

Division No. 338]
[5.16 pm


AYES


Atkinson, Peter (Hexham)
Kennedy, Rt Hon Charles (Ross Skye & Inverness W)


Beggs, Roy



Beith, Rt Hon A J
Kirkwood, Archy


Boswell, Tim
Lewis, Dr Julian (New Forest E)


Bottomley, Peter (Worthing W)
Lilley, Rt Hon Peter


Bottomley, Rt Hon Mrs Virginia
Loughton, Tim


Burnett, John
McIntosh, Miss Anne


Burstow, Paul
Maclean, Rt Hon David


Campbell, Rt Hon Menzies (NE Fife)
Major, Rt Hon John



Mitchell, Austin


Chapman, Sir Sydney (Chipping Barnet)
Morgan, Alasdair (Galloway)



Page, Richard



Pickles, Eric


Chope, Christopher
Rendel, David


Clifton-Brown, Geoffrey
Russell, Bob (Colchester)


Collins, Tim
Shephard, Rt Hon Mrs Gillian


Davey, Edward (Kingston)
Spring, Richard


Davis, Rt Hon David (Haltemprice)
Syms, Robert


Emery, Rt Hon Sir Peter
Taylor, Rt Hon John D (Strangford)


Fearn, Ronnie
Welsh, Andrew


Forth, Rt Hon Eric
Winterton, Mrs Ann (Congleton)


George, Andrew (St Ives)



Gray, James
Tellers for the Ayes:


Harvey, Nick
Mr. John Butterfill and


Heath, David (Somerton & Frome)
Mr. Brian Cotter.


NOES


Adams, Mrs Irene (Paisley N)
Butler, Mrs Christine


Ainger, Nick
Byers, Rt Hon Stephen


Ainsworth, Robert (Cov'try NE)
Caplin, Ivor


Allen, Graham
Casale, Roger


Anderson, Donald (Swansea E)
Caton, Martin


Atkins, Charlotte
Cawsey, Ian


Austin, John
Clapham, Michael


Banks, Tony
Clark, Rt Hon Dr David (S Shields)


Barnes, Harry
Clarke, Eric (Midlothian)


Battle, John
Clelland, David


Bayley, Hugh
Coaker, Vernon


Beard, Nigel
Coleman, Iain


Beckett, Rt Hon Mrs Margaret
Colman, Tony


Begg, Miss Anne
Connarty, Michael


Bell, Martin (Tatton)
Cook, Frank (Stockton N)


Bell, Stuart (Middlesbrough)
Cooper, Yvette


Bennett, Andrew F
Corbyn, Jeremy


Bermingham, Gerald
Corston, Jean


Berry, Roger
Cox, Tom


Blackman, Liz
Cryer, John (Hornchurch)


Boateng, Rt Hon Paul
Cunningham, Jim (Cov'try S)


Bradley, Keith (Withington)
Darling, Rt Hon Alistair


Bradshaw, Ben
Davey, Valerie (Bristol W)


Brinton, Mrs Helen
Davidson, Ian


Browne, Desmond
Davies, Rt Hon Denzil (Llanelli)


Buck, Ms Karen
Davis, Rt Hon Terry (B'ham Hodge H)


Burden, Richard






Dawson, Hilton
MacShane, Denis


Dismore, Andrew
Mactaggart, Fiona


Dobson, Rt Hon Frank
McWalter, Tony


Dowd, Jim
McWilliam, John


Drown, Ms Julia
Mahon, Mrs Alice


Eagle, Angela (Wallasey)
Mallaber, Judy


Eagle, Maria (L'pool Garston)
Marsden, Gordon (Blackpool S)


Ennis, Jeff
Marsden, Paul (Shrewsbury)


Etherington, Bill
Marshall, David (Shettleston)


Field, Rt Hon Frank
Marshall-Andrews, Robert


Fitzpatrick, Jim
Martlew, Eric


Flint, Caroline
Maxton, John


Flynn, Paul
Meacher, Rt Hon Michael


Foster, Michael Jabez (Hastings)
Meale, Alan


Galloway, George
Merron, Gillian


Gapes, Mike
Michael, Rt Hon Alun


Gardiner, Barry
Michie, Bill (Shef'ld Heeley)


Gerrard, Neil
Miller, Andrew


Gibson, Dr Ian
Moffatt, Laura


Godman, Dr Norman A
Moran, Ms Margaret


Golding, Mrs Llin
Mountford, Kali


Gordon, Mrs Eileen
Murphy, Jim (Eastwood)


Griffiths, Jane (Reading E)
Naysmith, Dr Doug


Griffiths, Nigel (Edinburgh S)
O'Brien, Bill (Normanton)


Grogan, John
O'Hara, Eddie


Hall, Patrick (Bedford)
Olner, Bill


Hamilton, Fabian (Leeds NE)
O'Neill, Martin


Hanson, David
Osborne, Ms Sandra


Healey, John
Palmer, Dr Nick


Henderson, Ivan (Harwich)
Pearson, Ian


Heppell, John
Perham, Ms Linda


Hesford, Stephen
Pike, Peter L


Hewitt, Ms Patricia
Plaskitt, James


Hill, Keith
Pollard, Kerry


Hinchliffe, David
Pope, Greg


Hodge, Ms Margaret
Pound, Stephen


Hope, Phil
Prentice, Ms Bridget (Lewisham E)


Howells, Dr Kim
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Quinn, Lawrie


Hurst, Alan
Radice, Rt Hon Giles


Hutton, John
Rammell, Bill


Illsley, Eric
Raynsford, Nick


Jackson, Helen (Hillsborough)
Reed, Andrew (Loughborough)


Jenkins, Brian
Reid, Rt Hon Dr John (Hamilton N)


Jones, Mrs Fiona (Newark)
Roche, Mrs Barbara


Jones, Ms Jenny (Wolverh'ton SW)
Rogers, Allan



Rooker, Rt Hon Jeff


Jones, Dr Lynne (Selly Oak)
Roy, Frank


Jones, Martyn (Clwyd S)
Ruane, Chris


Keeble, Ms Sally
Ruddock, Joan


Keen, Alan (Feltham & Heston)
Salter, Martin


Keen, Ann (Brentford & Isleworth)
Sarwar, Mohammad


Kemp, Fraser
Sedgemore, Brian


Kennedy, Jane (Wavertree)
Sheldon, Rt Hon Robert


Khabra, Piara S
Skinner, Dennis


King, Ms Oona (Bethnal Green)
Smith, Jacqui (Redditch)


Kumar, Dr Ashok
Smith, John (Glamorgan)


Ladyman, Dr Stephen
Smith, Llew (Blaenau Gwent)


Lawrence, Mrs Jackie
Soley, Clive


Laxton, Bob
Southworth, Ms Helen


Leslie, Christopher
Spellar, John


Levitt, Tom
Squire, Ms Rachel


Lewis, Ivan (Bury S)
Starkey, Dr Phyllis


Linton, Martin
Stevenson, George


Lloyd, Tony (Manchester C)
Stoate, Dr Howard


Lock, David
Strang, Rt Hon Dr Gavin


Love, Andrew
Taylor, Rt Hon Mrs Ann (Dewsbury)


McAvoy, Thomas



McCabe, Steve
Taylor, David (NW Leics)


McCafferty, Ms Chris
Temple-Morris, Peter


McDonagh, Siobhain
Thomas, Gareth (Clwyd W)


Macdonald, Calum
Thomas, Gareth R (Harrow W)


McDonnell, John
Timms, Stephen


McIsaac, Shona
Touhig, Don


Mackinlay, Andrew
Trickett, Jon


McNulty, Tony
Twigg, Derek (Halton)






Tynan, Bill
Winnick, David


Vis, Dr Rudi
Winterton, Ms Rosie (Doncaster C)


Walley, Ms Joan
Wood, Mike


Ward, Ms Claire
Wright, Anthony D (Gt Yarmouth)


Wareing, Robert N
Wright, Tony (Cannock)


White, Brian
Wyatt, Derek


Whitehead, Dr Alan



Williams, Rt Hon Alan (Swansea W)
Tellers for the Noes:



Mrs. Anne McGuire and


Wills, Michael
Mr. Gerry Sutcliffe.

Question accordingly negatived.

Clause 9

ADMINISTRATION ORDERS

Mr. Page: I beg to move amendment No. 26, in page 6, line 7, at end insert "and occupied by".

Madam Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 27, in page 6, line 14, at end insert "and occupied by".
No. 23, in schedule 1, page 15, line 25, at end insert "and occupied by".
No. 25, in schedule 3, page 38, line 19, after second "to", insert "and occupied by".
No. 24, in page 38, line 37, after second "to", insert "and occupied by".

Mr. Page: Unusually, I start by paying a small tribute to the Government and the Minister for at long last recognising the current legal difficulties affecting landlords and companies. The position was anomalous; it was and is quite illogical for a landlord to be prevented from taking proceedings against a company in possession of premises rented from that landlord when, at the same time, the landlord is allowed to re-enter such premises peaceably. Unfortunately, the Department's proposal is still confusing.
It appears on the basis of the legal advice I have received—not from the good justice Neuberger, but from another source—that under the amendment tabled by the Minister in Committee, it would be possible for a landlord to be forbidden from peaceably re-entering premises that are not occupied by the company that has sought and obtained a moratorium. I find the reasoning behind that rather difficult to detect.
The amendments are of a probing nature; I am a seeker after truth. Looking the hon. Member for Great Grimsby (Mr. Mitchell) in the eye, I say that this is a query from a vested interest. It is important that this matter is clarified. I am delighted that the hon. Gentleman was in the Lobby, voting for the new clause. I commend him on his courage at this particular moment in his political career.
The purpose of the new moratorium procedure is to protect companies that have a reasonable prospect of becoming viable during a limited period. We all say amen to that and we all hope that they will be viable not only for that limited period, but will successfully trade out of their difficulties. I agree with the Minister that it would be quite perverse for such companies to be deprived by a landlord of the premises that they legitimately occupy:

however peaceably that landlord regained possession, the business would collapse and the purpose of the moratorium would be negated.
Surely there should be no bar on a landlord reoccupying premises that the company in question is not using. It cannot be carrying on businesses vital to the success of the moratorium in premises that are unoccupied. I believe that the amendments would deal with the odd situation that the Bill will create. They will ensure that the landlord's legitimate interests in unoccupied premises are protected, while ensuring that companies under the protection of the new moratorium procedures do not suffer.
As long ago as 15 June my noble Friend Baroness Buscombe pointed out in another place the problems that arose from the Bill in its previous form. I will not go through all the difficulties and problems that would emerge, but I can understand that it is a natural instinct for a company in difficulty to keep as many options open as possible.
Would a fairer balance be struck if, as part of that application for a statutory moratorium, the tenant was required to specify those tenancies which were essential to the rescue effort? These would be protected by the moratorium, while the landlord's rights in relation to the remainder would be unaffected. This exception to the general rule could be achieved as part of the revision of the insolvency rules.
Nothing brings home the value of an amendment more than examples from the real world, and I have one. Three months after an administrator was appointed, a debtor who had leased three properties from a large landlord produced a list of properties that the debtor wished to retain and take forward to see his company survive. One month's rent had been paid on one property, but nothing had been paid on the others. One unit had been sold with full payment of arrears, although it took some time for the landlord to receive confirmation that the arrears would be made good. The second unit had been closed, and the administrator wished to retain the third. As matters stand, the landlord would be forbidden from doing anything with the premises that were not required.
As I said, my noble Friend Baroness Buscombe spoke about the matter some time ago, but it has taken six months for Government amendments to be introduced. Why on earth did it take so long to introduce those relatively simple amendments? That sort of delay is unacceptable. Furthermore, the lateness of the arrival of the Government amendments means that it has been difficult for the Opposition to consult all the interested parties, take advice and reach a satisfactory overall position. My amendments would address the problem, and I shall be interested to hear what the Minister has to say about the points that I have made.

Sir Sydney Chapman: I support the amendments tabled by my hon. Friend the Member for South-West Hertfordshire (Mr. Page) and my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). As the Minister will know, I generally support the Bill, although, in Committee, I argued for ways in which it could be improved. However, at the basis of the Bill is the fact that it is fair legislation. The Government's intention in establishing moratorium arrangements in insolvency legislation is to enable businesses to trade out of their difficulties if possible. I fully support the Minister in trying to achieve that.
The British Property Federation has brought a certain matter to my attention. It states that the issue in question is the Government's
proposal to reverse the Razzaq vs Pala court decision so that a landlord may not exercise the right of peaceable re-entry of a property while a voluntary moratorium agreement is in place without the permission of a court.
I agree with the general principle of that proposal, as does the British Property Federation. However, the federation is concerned to ensure that the fair balance between the interests of landlords and tenants is not disturbed, and that both should feel that their interests are properly safeguarded under the legislation. I should tell the House, and the hon. Member for Great Grimsby (Mr. Mitchell) in particular, that I am not a landlord or a tenant, so I do not have a vested interest in advancing that case. However, the British Property Federation makes a fair point.

Mr. Burnett: Does the hon. Gentleman agree that property might be empty at the time of a moratorium because there is no stock and no money to pay for it? However, the moratorium would result in restructuring of finances and there could be cash and stock, and the property might have to be used again.

Sir Sydney Chapman: I think that I am at one with the hon. Gentleman. However I shall choose my words carefully and say that the balance of fairness would be preserved if, as an exception to the general rule, a tenant applying for a statutory moratorium was required to specify those tenancies that were essential to the rescue effort. Those would be protected by the moratorium, while landlords' rights in relation to the remainder would be unaffected. Our amendments would achieve that and ensure fairness. Will the Minister look at them sympathetically, as they would make the Bill fairer?

Dr. Howells: I have a great deal of sympathy with the approach of the hon. Member for Chipping Barnet (Sir S. Chapman). It is an issue that we have to look at carefully. We undertook a short consultation and, not surprisingly, views were polarised. It could prove to be a bone of contention.
The amendments tabled by the hon. Member for South-West Hertfordshire (Mr. Page) would permit a landlord to exercise the right of forfeiture by means of peaceful re-entry where the premises concerned were unoccupied without first having to go to court. As the hon. Member for Torridge and West Devon (Mr. Burnett) said, just because premises are unoccupied does not necessarily mean that they are essential to the rescue attempt, and that is why we do not consider the amendments to be appropriate.
After consulting and listening to the arguments, we concluded that the best way to approach the issue was to give the landlord the right to apply to the court for leave to re-enter any premises leased by the company or debtor to see whether or not they were necessary to the rescue attempt. The court can decide whether it is appropriate for the landlord to exercise the right of forfeiture.
The amendments could possibly mean that in order to ensure that a landlord could not exercise a right peaceably to re-enter premises, the company would have to ensure that the premises in question were physically occupied at all times. That seems unnecessary.
There is also the point that the company may have sub-let its premises. In those circumstances, the premises clearly would not be occupied by the company, hence the landlord would presumably be free to exercise any right to peaceably re-enter despite the fact that the premises might be essential to the rescue attempt.
If premises are no longer needed by a tenant, he is unlikely to defend any application by a landlord to forfeit the lease permitted by the court. Further, peaceable re-entry is not a frequently used right and also applies almost exclusively to business premises. In addition, the moratorium is very short, so the impact of the provision on a landlord would be limited in terms of time. I hope that the hon. Gentleman will accept that explanation of where we stand and why we think that the amendments are not entirely appropriate.

Mr. Page: In view of the Minister's explanation and the point that I had not fully considered regarding premises being sub-let, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Clause 12

INSOLVENT ESTATES OF DECEASED PERSONS

Mr. Page: I beg to move amendment No. 28, in page 7, line 32, at end insert—
'who has died after the commencement of this section'.
The amendment appears to be relatively simple and straightforward and I hope that the Minister sees it that way as well. It is highly important as it deals with a problem on which Ministers here and in another place have failed to satisfy right hon. and hon. Members and experts in insolvency law outside the House.
It is clear that the provision will have serious consequences for debtors who die before it comes into operation. I am advised that if the provision is enacted in its present form it will have retrospective effects. I am always reminded of a story about Winston Churchill. Someone told him that the first day of a child's life is one of the most dangerous, and Winston Churchill replied that the last is not without its hazards as well. Leaving that aside, I dread to think of the position of people who have arranged their affairs on the basis of what they understood the law to be.
Widows who may be living on restricted means in modest accommodation may find themselves faced with debts equal to the value of the interest in their homes held by their dead husbands. It is obvious that they will not be able to pay, or if they do they will be eligible for a much greater degree of support from the social security system. I believe many things about the Government, but I do not believe that they intend or want such an effect, since ruining widows or families through retrospective changes in insolvency law would not win the votes or the popularity that all Governments seek.
5.45 pm
Far be it from me to try to help the Government to avoid the pitfalls of unpopularity, but the safeguard in the amendment would help them to avoid an unnecessary trap. I hope that that is a compelling argument for the


Minister to accept it, especially bearing in mind the fact that he is one of the self-confessed architects of new Labour.

Mr. Butterfill: I strongly support the amendment. It is a general principle of English law that legislation should not act retrospectively. It is not unknown for the House to pass retrospective legislation, but in general all Governments—and all hon. Members—have sought not to enact it, because it makes it difficult for people to plan their lives, creating unnecessary uncertainty and possibly affecting existing contractual arrangements.
There has long been a principle in English law that joint tenants own both absolutely and jointly, and that when one dies, the whole reverts to the other—or others, as there may be more than one. If the Government feel that that is no longer a form of ownership that should be protected, the answer is surely to amend the law on joint tenancies rather than to single out that area in the Bill.
Anomalies will be created. Building societies and others who have charges over property, in the expectation that they will achieve a charge over the whole in the case of a joint tenant, could have difficulties. The Bill is profoundly flawed on this matter, and that is compounded by the retrospective nature of clause 12.
This is not a new issue. It was considered by the Trade and Industry Committee, which said:
There is a genuine policy question as to whether the interests of a deceased debtor in property held jointly should be treated as forming part of his estate for the purpose of its administration in bankruptcy. This deserves to be addressed explicitly rather than by merely referring back to…the 1986 Act; it remains for Ministers to make a positive case
for any such change.
Clause 12 does precisely what the Trade and Industry Committee said that we should not do: it refers back to the 1986 Act. Frankly, that will not do. It is an abuse of the House and an affront to the Committee's recommendations. Another of its specific recommendations was:
It would be useful if the explanatory notes could confirm that no retrospective effect is intended…
The Bill does precisely the opposite. Neither the clause nor the retrospective effect should be allowed to survive.

Mr. Chope: My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) makes a powerful point that I wish to build on. When the Select Committee made the recommendation to which he referred, the Government responded in paragraph 20 of the fourth special report of the Trade and Industry Committee, issued on 8 February. They said that the Committee's comments had been noted, and that it would be made clear that the provisions would not have retrospective effect. Therefore the Government have already committed themselves to ensuring that the provision does not have retrospective effect, yet unless the amendment is accepted, clause 12 will have retrospective effect.
In a short debate on my amendment (a) in Standing Committee, I found it hard to follow the Minister's argument as to why the provision would not be retrospective. Having looked at his argument again, I am convinced that the Bill is retrospective, and that if the Government stick to it they will be contradicting their undertaking to the Select Committee.
The Minister told the Standing Committee:
Hon. Members will appreciate that we must strike a balance between the interests of creditors who have not been paid by a deceased insolvent and a survivor who has become sole owner of what he or she formerly owned jointly with a deceased insolvent.—[Official Report, Standing Committee B, Tuesday 7 November; c. 130.]
That would be fine if the Bill applies only to people who die after it attains Royal Assent. However, what happens to such a survivor who finds, after the Bill is enacted, that the provision is used to alter the position that he or she was in before the legislation was implemented?

Mr. Butterfill: I have an example in which my hon. Friend may be interested. In it, a woman who knows that her husband is terminally ill goes to a building society for a loan. It is granted on the basis that there is a joint tenancy and that, if the husband dies fairly quickly as is expected, she will own the whole property. Does my hon. Friend agree that the Bill would mean that the building society's security would be halved?

Mr. Chope: My hon. Friend is right, and I do not doubt that many other examples of that effect could be devised. However, that is the problem of retrospective legislation, as the Trade and Industry Committee recognised. The Government undertook that the provision would not have retrospective effect, but the Bill as it stands would have just that effect. I hope that the Government will accept the amendment.

Mr. Burnett: Clause 12 is designed to deal with a well known mischief. It is manifestly unfair that a deceased insolvent's interest in joint property escapes the creditor's net, but it is also unfair to make the change retrospectively. Retrospective law is bad law and contrary to the House's traditions. The hon. Member for Bournemouth, West (Mr. Butterfill) gave the example of a woman whose only asset, after she is widowed, might be the property in which she lives and which she will inherit from her insolvent husband when he dies.
Another problem appears in clause 12(3), which states that
the court must have regard to all the circumstances of the case, including the interests of the deceased's creditors and of the survivor.
However, the subsection continues:
but, unless the circumstances are exceptional—
and we do not know what is meant by "exceptional; that will be for the courts to decide in due course—
the court must assume that the interests of the deceased's creditors outweigh all other considerations.
That is pretty draconian and unfair.
In reply to a point I made in Committee about how long this liability was to last, the Minister referred me to the Limitation Act 1980—that is, six years. An order might be made or applied for under this measure in respect of events that occurred five years ago. That is a bit tough, and I hope that the Minister reconsiders. I support the amendment.

Dr. Howells: By way of clarification, the Select Committee did not consider this version of the clause. We have moved away from revesting a property in a trustee. I do not know whether the hon. Member for South-West


Hertfordshire (Mr. Page) has looked at what is, in effect, new clause 12, but as the hon. Member for Torridge and West Devon (Mr. Burnett) has just pointed out, the court can only make a monetary order and it will apply only when a petition is presented after the new section comes into force.
I hope that the hon. Member for Bournemouth, West (Mr. Butterfill) will look at subsection (3), which was referred to by the hon. Member for Torridge and West Devon. The court can do justice, having regard to all the interests concerned, which includes the interests of the former wife. I thought that the hon. Member for Bournemouth, West gave a good example. It is entirely reasonable to assume that there will be such cases.

Mr. Butterfill: I am grateful to the Minister for giving way, but that is not what subsection (3) actually says. It makes it clear that only in exceptional circumstances will anybody other than the creditors of the deceased be taken into account. I am by no means convinced that the circumstances that I have described—which I think are deserving, and would be accepted as such by any reasonable person—are what a court might consider, strictly speaking, as exceptional circumstances.

Dr. Howells: It is a statement of faith—obviously I have more faith in the courts than the hon. Gentleman in that respect. [Interruption.] I will be steady. I think that what I said in Committee still holds true: we need to strike a balance between the interests of creditors who have not been paid by a deceased insolvent and the survivor, who is the sole owner of what he or she formerly owned jointly with the deceased insolvent.
We are not convinced that the creditors of an insolvent should be in a worse position if the debtor has died than if he or she were living. We think that limiting the application of the new provision so that it will apply only in those cases where the petition for the insolvency administration order is presented after the new provision comes into force strikes the appropriate balance.
It must be remembered that prior to the Palmer case, it was understood that the survivor would automatically have been deprived of the deceased's interest and the creditors would have got the debtor's entire share. On that basis, no thought would have been given to the survivor's situation or interests.
Clause 12 certainly does not treat the survivor as harshly as that. Indeed, it provides for the court to have a discretion to make a monetary order against the survivor, which is very important. It provides that the order will concern only so much of the value lost to the estate as is needed to meet the debts and other liabilities to which his estate is subject. In addition, the court will make such an order only after it has weighed the interests of both the survivor and the deceased's creditors; and in the balancing exercise, the court must assume that the interests of the deceased's creditors will outweigh all other considerations, unless the circumstances are exceptional.

6 pm

Mr. Chope: Is the Minister telling us that the measure may not prove retrospective in practice because one may be able to get the indulgence of the court not to apply it retrospectively? Nevertheless, the legislation will apply

retrospectively and will put in jeopardy women whose husbands have died and who have relied upon having absolute entitlement to the formerly joint estate.

Dr. Howells: It is a question of balance. The hon. Gentleman is right: a judgment has to be made. As I have tried to explain, the provision will apply only in those cases in which a petition has been presented after the measure comes into force. We think that that is right and I hope that the hon. Member for South-West Hertfordshire will withdraw the amendment.

Mr. Page: On Second Reading in another place, the noble Lord McIntosh said that he understood
the need to be satisfied there is no retrospective aspect involved.—[Official Report, House of Lords, 4 April 2000; Vol. 611, c. 1272.]
In Committee, my hon. Friend the Member for Christchurch (Mr. Chope) said that he remained to be convinced that the Government's amendment would not have a retrospective effect. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) referred to the Select Committee report and touched on the matter yet again. My hon. Friend the Member for Christchurch referred the Minister to paragraph 20 of the Government's response to the Trade and Industry Committee, to the effect that the new provisions would not have a retrospective effect. My hon. Friend repeated that today.

Mr. Chope: It is important that the words be on the record. They are:
It will be made clear that provisions will not have retrospective effect.
That is what the Government said.

Mr. Page: I am always grateful to my hon. Friend for taking my next line away from me. which he did a number of times in Committee. My opportunity will come, however, as the wheel turns.
Despite all those Government statements and despite what the Minister has said, there has been no move. In its present form, the Bill has a retrospective effect in relation to those debtors who die before
the commencement of this section.
As I said, and it bears repeating, there will be widows who live in modest accommodation on a modest pension, who have ordered their affairs with regard to the law, and who, if the Bill is enacted in its present form, will find that their affairs are no longer valid.

Mr. Butterfill: Does my hon. Friend agree that the plight of such a widow is compounded by the fact that, under (b), the petition for the order can be presented within five years of the day her husband died? That means that she may have to wait five years to find out whether the provision will descend upon her. That is the most appalling uncertainty in which to place her.

Mr. Page: My hon. Friend makes his point. It is a fact of life that elderly people worry more than young people about security. I know of several of my elderly constituents who are desperately worried about accommodation and living in a secure environment. The risk of that environment being upset is exceedingly worrying.
The provision will put widows under pressure and at risk. The Minister says that he has faith in the courts and so do I—particularly if one has a lot of money. My faith in the courts is such that, as I read the section, it clearly directs the courts that unless there are exceptional circumstances they must assume that the interests of the deceased's creditors outweigh all other considerations.
The operative word is "exceptional". The Minister is therefore being disingenuous in his response. I do not believe that the effect that he described will be the effect in practice. The courts will, in practice, go for the extra money and those widows will be at risk, but—

Mr. Chope: I hope that my hon. Friend is not going to seek to withdraw the amendment. Surely, this is a constitutional outrage. Why should not this House deal with the matter rather than leaving it to the other place? Their Lordships were very concerned about any retrospective provisions. Will my hon. Friend join me to divide the House on this important issue?

Mr. Page: This is what friends are for. I have to tell my hon. Friend, having considered the Minister's answer, that I believe that although the thrust and tone of my amendment are right, the drafting is neither specific nor accurate enough to deal with the matter. The Minister has shown himself in his true colours by his answer. I will seek leave to withdraw the amendment, but I hope that it can be produced in another place and that the Government can find it in their heart to look at the matter once again. I beg to ask leave to withdraw the amendment.

Hon. Members: No.

Question put, That the amendment be made:—

The House divided: Ayes 34, Noes 210.

Division No. 339]
[6.5 pm


AYES


Atkinson, Peter (Hexham)
Kennedy, Rt Hon Charles (Ross Skye & Inverness W)


Beggs, Roy



Beith, Rt Hon A J
Lewis, Dr Julian (New Forest E)


Boswell, Tim
Lidington, David


Bottomley, Peter (Worthing W)
Lilley, Rt Hon Peter


Bottomley, Rt Hon Mrs Virginia
McIntosh, Miss Anne


Burnett, John
Maclean, Rt Hon David


Butterfill, John
Major, Rt Hon John


Campbell, Rt Hon Menzies (NE Fife)
Öpik, Lembit



Page, Richard


Chapman, Sir Sydney (Chipping Barnet)
Pickles, Eric 



Rendel, David


Clifton-Brown, Geoffrey
Russell, Bob (Colchester)



Spring, Richard


Cotter, Brian
Stanley, Rt Hon Sir John


Davis, Rt Hon David (Haltemprice)
Syms, Robert


Fearn, Ronnie
Winterton, Mrs Ann (Congleton)


Gray, James



Harris, Dr Evan
Tellers for the Ayes:


Harvey, Nick
Mr. Christopher Chope and


Heathcoat-Amory, Rt Hon David
Mr. David Heath.


NOES


Adams, Mrs Irene (Paisley N)
Banks, Tony


Ainger, Nick
Barnes, Harry


Ainsworth, Robert (Cov'try NE)
Barron, Kevin


Anderson, Donald (Swansea E)
Battle, John


Atkins, Charlotte
Bayley, Hugh


Austin, John
Beard, Nigel





Beckett, Rt Hon Mrs Margaret
Howells, Dr Kim


Begg, Miss Anne
Hurst, Alan


Bell, Martin (Tatton)
Hutton, John


Bell, Stuart (Middlesbrough)
Illsley, Eric


Bennett, Andrew F
Jackson, Helen (Hillsborough)


Bermingham, Gerald
Jenkins, Brian


Berry, Roger
Jones, Ms Jenny (Wolverh'ton SW)


Blackman, Liz



Bradley, Keith (Withington)
Jones, Dr Lynne (Selly Oak)


Bradshaw, Ben
Jones, Martyn (Clwyd S)


Brinton, Mrs Helen
Keeble, Ms Sally


Browne, Desmond
Keen, Alan (Feltham & Heston)


Buck, Ms Karen
Keen, Ann (Brentford & Isleworth)


Burden, Richard
Kemp, Fraser


Butler, Mrs Christine
Kennedy, Jane (Wavertree)


Caplin, Ivor
Khabra, Piara S


Casale, Roger
King, Ms Oona (Bethnal Green)


Caton, Martin
Ladyman, Dr Stephen


Cawsey, Ian
Lawrence, Mrs Jackie


Clapham, Michael
Laxton, Bob


Clark, Rt Hon Dr David (S Shields)
Leslie, Christopher


Clarke, Eric (Midlothian)
Levitt, Tom


Clelland, David
Lewis, Ivan (Bury S)


Coaker, Vernon
Linton, Martin


Coleman, Iain
Lloyd, Tony (Manchester C)


Colman, Tony
Llwyd, Elfyn


Connarty, Michael
McAvoy, Thomas


Cook, Frank (Stockton N)
McCafferty, Ms Chris


Cooper, Yvette
McDonagh, Siobhain


Corbyn, Jeremy
Macdonald, Calum


Cousins, Jim
McGuire, Mrs Anne


Cox, Tom
McIsaac, Shona


Cryer, John (Hornchurch)
Mackinlay, Andrew


Cunningham, Jim (Cov'try S)
McNulty, Tony


Darling, Rt Hon Alistair
MacShane, Denis


Davey, Valerie (Bristol W)
Mactaggart, Fiona


Davies, Rt Hon Denzil (Llanelli)
McWalter, Tony


Davis, Rt Hon Terry (B'ham Hodge H)
McWilliam, John



Mahon, Mrs Alice


Dawson, Hilton
Marsden, Gordon (Blackpool S)


Dismore, Andrew
Marsden, Paul (Shrewsbury)


Dobson, Rt Hon Frank
Marshall, David (Shettleston)


Dowd, Jim
Marshall-Andrews, Robert


Drown, Ms Julia
Martlew, Eric


Eagle, Angela (Wallasey)
Maxton, John


Eagle, Maria (L'pool Garston)
Meacher, Rt Hon Michael


Ennis, Jeff
Meale, Alan


Etherington, Bill
Merron, Gillian


Field, Rt Hon Frank
Michael, Rt Hon Alun


Fitzpatrick, Jim
Michie, Bill (Shef'ld Heeley)


Flint, Caroline
Miller, Andrew


Flynn, Paul
Mitchell, Austin


Foster, Michael Jabez (Hastings)
Moffatt, Laura


Foulkes, George
Moran, Ms Margaret


Galloway, George
Morris, Rt Hon Sir John (Aberavon)


Gapes, Mike



Gardiner, Barry
Mountford, Kali


Gerrard, Neil
Murphy, Jim (Eastwood)


Gibson, Dr Ian
Naysmith, Dr Doug


Godman, Dr Norman A
O'Brien, Bill (Normanton)


Golding, Mrs Llin
O'Hara, Eddie


Gordon, Mrs Eileen
Olner, Bill


Griffiths, Jane (Reading E)
Osborne, Ms Sandra


Griffiths, Nigel (Edinburgh S)
Palmer, Dr Nick


Grogan, John
Pearson, Ian


Hall, Patrick (Bedford)
Perham, Ms Linda


Hamilton, Fabian (Leeds NE)
Pike, Peter L


Hanson, David
Plaskitt, James


Healey, John
Pollard, Kerry


Henderson, Ivan (Harwich)
Pope, Greg


Heppell, John
Pound, Stephen


Hesford, Stephen
Prentice, Ms Bridget (Lewisham E)


Hewitt, Ms Patricia
Prentice, Gordon (Pendle)


Hinchliffe, David
Quinn, Lawrie


Hodge, Ms Margaret
Radice, Rt Hon Giles


Hope, Phil
Rammell, Bill






Reed, Andrew (Loughborough)
Taylor, David (NW Leics)


Reid, Rt Hon Dr John (Hamilton N)
Temple-Morris, Peter


Roche, Mrs Barbara
Thomas, Gareth R (Harrow W)


Rogers, Allan
Timms, Stephen


Rooker, Rt Hon Jeff
Touhig, Don


Rowlands, Ted
Trickett, Jon


Roy, Frank
Twigg, Derek (Halton)


Ruane, Chris
Tynan, Bill


Ruddock, Joan
Vis, Dr Rudi


Salter, Martin
Walley, Ms Joan


Sarwar, Mohammad
Ward, Ms Claire


Sedgemore, Brian
Wareing, Robert N


Skinner, Dennis
White, Brian


Smith, Jacqui (Redditch)
Whitehead, Dr Alan


Smith, John (Glamorgan)
Williams, Rt Hon Alan (Swansea W)


Smith, Llew (Blaenau Gwent)
Williams, Alan W (E Carmarthen)


Soley, Clive
Wills, Michael


Southworth, Ms Helen
Winnick, David


Spellar, John
Winterton, Ms Rosie (Doncaster C)


Squire, Ms Rachel
Wood, Mike


Starkey, Dr Phyllis
Wright, Anthony D (Gt Yarmouth)


Stevenson, George
Wright, Tony (Cannock)


Stoate, Dr Howard
Wyatt, Derek


Strang, Rt Hon Dr Gavin



Sutcliffe, Gerry
Tellers for the Noes:


Taylor, Rt Hon Mrs Ann (Dewsbury)
Mr. Graham Allen and



Mr. Kevin Hughes.

Question accordingly negatived.

Clause 15

REPEALS AND AMENDMENTS

Dr. Ho wells: I beg to move amendment No. 51, in page 9, line 40, at end insert—
'(3) Section 356 of that Act (Authority's powers to participate in proceedings: company voluntary arrangements) is amended as follows—
(a) for subsection (1), there is substituted—
(1) Where a voluntary arrangement has effect under Part I of the 1986 Act in respect of a company or insolvent partnership which is an authorised person, the Authority may apply to the court under section 6 or 7 of that Act.",
(b) for subsection (2), there is substituted—
(2) Where a voluntary arrangement has been approved under Part II of the 1989 Order in respect of a company or insolvent partnership which is an authorised person, the Authority may apply to the court under Article 19 or 20 of that Order.",
(c) in subsection (3), for "either" there is substituted "any" '.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss Government amendments Nos. 52 and 53.

Dr. Howells: In Committee, the hon. Member for South-West Hertfordshire (Mr. Page) asked whether the Financial Services Authority should also be given the right to apply to a court under paragraph 39 of proposed new schedule Al to the Insolvency Act 1986, and he subsequently wrote to me on that point. I have carefully considered what he said, and I have concluded that we should afford the authority that further right—the right to make applications to the court on the grounds that any of the company's creditors or any other person is dissatisfied with the actions of the supervisor, and for the authority to be heard if such an application is made by another.
However, we need to go a stage further. Such rights should also be afforded to the authority in respect of applications under section 7 of the 1986 Act and article 20 of the Insolvency (Northern Ireland) Order 1989. Those involve a procedure relating to existing voluntary arrangements without a moratorium, both here and in Northern Ireland. Such rights were not included in the Financial Services and Markets Act 2000 when it was passing through Parliament. We have concluded that they should have been, especially as the authority is given such rights in that Act to make an application and to appear on an application by another, in relation to the actions of a supervisor and the individual voluntary arrangements procedures.
We have therefore tabled amendments Nos. 51, 52 and 53, to give the authority the right to make applications and be heard on applications under those three provisions. All three allow applications to be made where any of the company's creditors, or any other person, is dissatisfied by any act, omission or decision of the supervisor.

Mr. Page: I wish to express to the Minister my appreciation of the fact that he has listened to the arguments. We shall support him if amendments Nos. 51, 52 and 53 are pressed to a vote.

Amendment agreed to.

Clause 17

EXTENT

Amendment made: No. 52, in page 10, line 8, after "except" insert "section 15(3),".—[Dr. Howells.]

Orders of the Day — Schedule 1

MORATORIUM WHERE DIRECTORS PROPOSE VOLUNTARY ARRANGEMENT

Dr. Howells: I beg to move amendment No. 5, in page 11, line 37, at end insert—
'"money market contract" and "money market charge" have the meanings given by the Financial Markets and Insolvency (Money Market) Regulations 1995 ("the 1995 regulations"),'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 6 to 9.
Amendment No. 1, in page 12, line 24, after "small", insert "or medium".
Amendment No. 2, in page 14, line 12, leave out "28" and insert "90".
Government amendments Nos. 10 to 12.

Dr. Howells: The Bill already contains provisions to prevent the moratorium prejudicing the existing modifications of insolvency law applicable to contracts undertaken in connection with certain key operations on the financial markets. The modifications to insolvency law are contained in part 7 of the Companies Act 1989 and the provisions in the Bill are to be found in paragraphs 2 and 23 of the proposed schedule A 1 to the Insolvency Act 1986.
The purpose of the modification of insolvency law is to protect the integrity of the financial markets, to provide an appropriate framework to deal with the possibility that a market participant may default on his obligations, and to avoid systemic risk. However, a little more is needed.
The amendments are intended to ensure that the moratorium does not prejudice the existing modifications of insolvency law relating to "money market contracts", "money market charges" and "related contracts" as defined in the Financial Markets and Insolvency (Money Market) Regulations 1995, and "system-charges" as defined in the Financial Markets and Insolvency Regulations 1996.
The amendments are necessary to enable financial markets to continue to function in the event of the insolvency of one of the market participants. The Government do not believe that these exemptions will have a significant effect on the operation or effectiveness of the moratorium, because it is to be an option for smaller companies that would not normally participate in such markets.

Amendment agreed to.

Amendments made: No. 6, in page 11, line 40, at end insert—
'"related contract" has the meaning given by the 1995 regulations,'.

No. 7, in page 11, line 42, at end insert—
'system-charge" has the meaning given by the Financial Markets and Insolvency Regulations 1996,'.

No. 8, in page 12, line 11, after "contract", insert—
', a money market contract or a related contract'.

No. 9, in page 12, line 12, after "charge", insert—
', a money market charge or a system-charge'.[Dr. Howells.]

Mr. Chope: I beg to move amendment No. 15, in page 13, leave out lines 6 and 7 and insert—
'(a) such information as is necessary for a nominee to be able to judge if there is a reasonable prospect of drawing up a workable voluntary arrangement which warrants being submitted to creditors,'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 16, in page 13, leave out lines 16 and 17 and insert—
'(a) there is a reasonable prospect of a workable voluntary arrangement being drawn up which warrants being submitted to creditors,'.
No. 34, in page 13, line 16, leave out "the proposed" and insert "a".
No. 17, in page 13, line 24, at end insert—
'but he shall take steps to assure himself independently of the validity of information submitted by directors in relation to subparagraph (2)(b).'.
No. 44, in page 13, line 35, at end insert—
'(iii) a statement from the directors of the company stating that the nominee is independent of the company's officers, the company, its subsidiaries and associated companies.'.
No. 35, in page 13, line 39, leave out "the proposed" and insert "a".
No. 36, in page 20, line 6, leave out "the proposed" and insert "a".
No. 37, in page 20, line 27, leave out "the proposed" and insert "a".
No. 38, in page 33, line 39, leave out "the proposed" and insert "a".
No. 39, in schedule 3, page 39, line 5, leave out "the" and insert "a".
No. 40, in page 39, line 5, leave out—
'which the debtor is proposing'.
No. 41, in page 40, line 2, leave out "the" and insert "a".
No. 42, in page 40, line 2, leave out—
'which the debtor is proposing'.

Mr. Chope: The amendments are motivated by the unanimous recommendations of the Select Committee on Trade and Industry. They are designed to ensure that a moratorium works better in practice than we fear that it will work under the Bill as drafted.
Paragraph 19 of the report refers in detail to the concerns that were expressed to us by, among others, the Institute of Chartered Accountants in England and Wales. We reached the conclusion that a balance is required between the recognition that a moratorium may he needed urgently to give time for a nominee to sit down with directors and others to find out whether proposals can be put to a creditors meeting with a chance of acceptance, and a limitation on the possibility of making the protection of a moratorium available simply on demand. In that case, there would be no chance of other arrangements subsequently being accepted. Unfortunately, the Bill does not deal with that concern in the way that we hoped it would. Despite having talked about consultation, the Government have dismissed rather peremptorily the concerns that have been expressed.
The Institute of Chartered Accountants in England and Wales supports a moratorium as part of the existing procedure for company voluntary arrangements, but it does not believe that the Bill will achieve the right result. It says:
In order for the company to obtain the moratorium, the directors are expected to submit to the nominee the terms of the proposed voluntary arrangement and a statement of the company's affairs. The nominee is expected to provide the directors with a statement indicating whether or not, in his opinion, the proposed arrangement is reasonable and the company is likely to have sufficient funds available during the moratorium.
The institute—the experts—went on to say:
The implications of these requirements are that, before the moratorium begins, the directors will have to have obtained all the information they need to formulate a proposed arrangement and to prepare the statement of affairs. Similarly, the nominee is expected to have been able to form opinions before the moratorium begins. This seems contrary to the purpose of the moratorium which is to allow time for the directors to put together a voluntary arrangement. We consider that all that should be necessary to obtain a moratorium would be a requirement for the directors to submit to the court a petition giving the reason why a moratorium is necessary, the name of the nominee and a letter of acceptance of appointment from the nominee and a funding proposal for the 28 days of the moratorium.
If the Government had listened to the evidence that the Select Committee received, and taken note of the Committee's conclusions after it had heard that evidence, the Bill would be more likely to succeed in its avowed purpose. It would be much improved if the amendment were accepted.

Mr. Butterfill: I support everything that my hon. Friend the Member for Christchurch (Mr. Chope) said. The evidence that we heard at the Select Committee hearings was very powerful. The Committee was


unanimous in its concern that a moratorium would require funding. A moratorium is not of itself necessarily a panacea—indeed, it could make the situation of creditors worse.
The fact that there is a 28-day delay while a funding proposal is produced is frightfully important. In a large number—if not the majority—of cases the rescue attempt will probably not succeed. That is not to say that it may not be worth trying, but if the procedure is used frequently, and, in particular, without sufficient deliberation beforehand, some people may end up worse off than they would have been. That is why the Government should have taken more notice of the Select Committee's recommendations and why I support the amendment.

Dr. Howells: The obtaining of a moratorium will result in significant restrictions being imposed on the exercise of creditors' rights. For that reason, we consider it important that there should be reasonable grounds for confidence that a voluntary arrangement is likely to be approved and implemented at the end of a moratorium. The formulation of amendment No. 16 would only require the nominee to express a view on whether what is likely to be put to creditors would be workable. It does not ask him to say whether he thinks the directors' actual voluntary arrangement proposal, once provided, is likely to be approved and implemented.
The requirement is important because the moratorium is not intended to be a refuge for hopeless cases. A proposal could be workable but it might be evident that it would not be acceptable to creditors, perhaps because it would pay them less than they would get in a liquidation. Only companies that are eligible and whose rescue proposals have a reasonable chance of success should be able to obtain a moratorium. That is why we believe that a company should not be able to obtain a moratorium unless the nominee considers that a voluntary arrangement proposal, as provided by the directors, stands a reasonable chance of being approved and implemented.
Given the key role of the nominee in that regard, it would not be acceptable to expect him to express such a view on anything less than a properly worked out proposal. Therefore, information indicating that it might be possible to put a proposal together once a moratorium has started will not be enough. We wish the nominee to be able to see exactly what the directors propose by way of a voluntary arrangement and then use that document as a basis for expressing his opinion on whether a successful rescue is likely to result.
If a company is to have the benefits afforded by a moratorium, there should be reasonable grounds for confidence that a voluntary arrangement is likely to be approved and implemented. There was disagreement in the Committee about whether the amendment that the hon. Member for South-West Hertfordshire (Mr. Page) proposed to the paragraph would introduce a lower or higher hurdle, but I do not think that there is much doubt about whether the amendment would result in an easier text; it does not offer that assurance, and I therefore urge the hon. Member for Christchurch (Mr. Chope) to withdraw it.

Mr. Chope: We again have the Minister's views on record. At least he is being consistent by taking the same

line that he took in response to the Select Committee report, which is more than can be said for his approach to an earlier amendment. Although the debate occasionally seemed like a dialogue of the deaf, in the atmosphere of benevolence that is developing, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Mr. Page: I beg to move amendment No. 18, in page 16, line 33, after "enforced", insert—
'against a liquidator representing interests including interests of creditors of the company at the time of the moratorium'.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following amendments: No. 19, in page 16, line 33, leave out "that" and insert "the".
No. 20, in page 16, line 33, after "time", insert "of its grant".
No. 31, in page 16, line 34, leave out "it" and insert—
'the consideration for which the security was granted'.
No. 32, in page 16, line 34, at end insert—
'or if, at any time, the security is approved by the committee established under paragraph 35(1) or, where there is no such committee, by the nominee.'.

Mr. Page: The amendments touch on matters that I raised in Committee, and to which I believe it is important that we return.
The parts of schedule 1 that provide for invalidating a security to be granted during a moratorium seem at first glance to be sensible enough. They would ensure that a company under the protection of a moratorium would not be able to grant security to one preferred creditor to the detriment of others. That is fair enough. However, there is the fundamental point that the company's other creditors need protection primarily in circumstances arising from the failure of the moratorium. If the moratorium succeeds, cheers all round. The loans will be safe and they will be repaid in due course.
In its present form, the schedule seems to protect companies under the aegis of a moratorium irrespective of the outcomes. A company that has experienced a moratorium and subsequently has grown will be under no obligation to meet its freely negotiated dues if the schedule is unaltered. I believe that the amendments address the issue. They will remove an anomalous and unnecessary advantage that may accrue to companies that successfully recover from a moratorium. There is no good reason for creating that extra protection for companies and I would be glad to hear what the Minister has to say, working on the assumption that I have interpreted this part of the Bill correctly.
Amendment No. 32 is closely related to amendment No. 18. It deals with the key issue of the likelihood of banks or other institutions lending to small companies during the moratorium. It is clear from the present drafting of the relevant paragraph in the schedule that the Department has missed the point. Under these provisions, the banks will be less likely to advance funds available during the moratorium rather than more likely. It will be on the banks and other lending institutions that the duty of determining whether there are reasonable grounds for making loans will fall.
Hon. Members on both sides of the House who have experience of running small firms will know how lengthy and time-consuming such inquiries can be. Lenders will not have access to the papers and statements that are available to the nominee, and may not necessarily be able to rely on information offered by the directors. Quite often it is the breakdown in communication between the directors and the banks that is partially responsible for the situation arising in the first place. In these circumstances it is understandable that banks will be highly cautious about lending.
It is one of the potential ironies of the Bill that it may reduce the flow of money to small companies when they are most likely to need it. A little experience in business suggests that that could well happen. The amendment will go some way to remove a future difficulty. I hope that the Minister finds it in his heart to accept it.

Dr. Howells: The purpose of amendment No. 18 is not clear. It appears to suggest that security granted by a company during a moratorium could be enforced only against a liquidator. That seems not to make sense. Security granted by a company over its assets is enforced by the holder of the security against those assets and not by a liquidator. Furthermore, a liquidator would not have been in office at the time that the security in question was given because a moratorium was in force. So we are left asking ourselves what security could be enforced and against whom if the amendment succeeded. The proposal could also be read as suggesting that security is generally enforceable other than against a liquidator. If that was what was intended, the amendment does not seem to achieve it.
It is also not clear what interests in addition to the interests of creditors it is intended a liquidator should represent. We consider that paragraph 14 should not be amended in that way.
Amendments Nos. 19 and 20 are simply unnecessary. The use of the phrase "at that time" in paragraph 14 is a clear reference to the time at which security is given by a company during a moratorium. Both amendments would only add unnecessary words.
Amendment No. 13 adds nothing. The granting of a security and the security itself are inextricably linked. A security could be of benefit to the company only if the company got something in return for granting it—for example, the funds necessary to enable it to finance a viable business. That security will either be of benefit to the company, or it will not. If it were not, we would want the security to be enforceable. Therefore, no more is needed to achieve the intended effect and I hope that the amendment will be withdrawn.

Mr. Page: In view of the Minister's response, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 10, in page 19, line 33, at end insert—
'a money market contract or a related contract,'.
No. 11, in page 19, line 35, after "charge", insert—
', a money market charge or a system-charge'.

No. 12, in page 19, line 46, after first "charge", insert—
', a money market charge, a system-charge'.
No. 13, in page 22, line 8, leave out from "period" to "and" in line 9 and insert—
'for the time being specified in paragraph 8(3))'.—[Mr. Pope.]

Mr. Page: I beg to move amendment No. 30, in page 28, line 33, leave out—
'to the value of £500 or more'.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 21, in page 28, line 35, leave out—
'to the value of £500 or more'.

Mr. Page: One of the penalties of growing older—albeit not old—is that one's memory starts to play tricks with one. I have a persistent memory of the then Labour Opposition claiming that they would be tough on crime and tough on the causes of crime—indeed, I seem to recall their making such statements in government.

Mr. Butterfill: rose—

Mr. Page: Perhaps my hon. Friend is about to tell me that my memory is not playing tricks and mention the reduction in police numbers.

Mr. Butterfill: I am tempted to do so, but I think that I should be likely to incur your wrath, Mr. Deputy Speaker, were I to pursue that route. However, I can confirm that my recollection of the Government's words is precisely the same as that of my hon. Friend.

Mr. Page: I thank my hon. Friend for assuring me that I am right, which enables me to proceed with greater confidence—I would have hated to start on dodgy or shaky ground.
In Committee, I definitely remember the Minister defending the £500 minimum in respect of the offence of removing any part of a company's property. He appealed to the provisions of insolvency law dating back as far as the Bankruptcy Act 1914.

Dr. Howells: I have no desire to delay the House, but I am delighted to be able to tell the hon. Gentleman that we have tracked back as far as the Bankruptcy Act 1824, which also imposed a £10 threshold.

Mr. Page: I am glad to learn that the Minister has been ferreting around, but I, too, have done a little ferreting and it may be that I shall be able to trump him by going back a few more years.
The Minister has now told us that the £10 threshold was in place almost 100 years before the Act to which he referred in Committee was passed. However, my historical research has revealed that, in 1811, Members of Parliament debated at some length whether stealing goods from a house to a value of more than 40 shillings should be a capital offence, whereas the threshold in respect of stealing from a shop was only 5 shillings. Evidently, they were worried about their servants stealing from them—the Minister will understand that problem. I wonder what punishment those Members of Parliament would have


thought appropriate had they heard today's news that a wedding gift worth £1 million has gone walkabout from a house in London.
However, life moved on and in 1860, stealing goods worth £10 or more led to hard labour or transportation. The judiciary was obviously having difficulty in obtaining convictions leading to capital punishment for the theft of sums larger than 40 shillings, so transportation was introduced. As the crime was stealing goods worth £10 or more, that meant that we were sending only the bigger and better operators over to Australia. That must be the genetic reason why the Australians regularly thrash us at all forms of sport.
I make no apology for returning to the subject. Although the Minister's historical examples were extremely interesting, they were not matched by the soundness of his arguments. He told us that during a moratorium, directors were unlikely to spirit away the various assets. Human nature being what it is, if a director thinks that the moratorium will fail, the temptation to spirit away assets during that period of grace will in certain cases become irresistible.
As I understand it, it is the nominee's duty to monitor the company's affairs so that he or she may come to an opinion whether a proposed voluntary arrangement has a reasonable prospect of being approved and implemented. Furthermore, the nominee is required to be satisfied that the company will have sufficient funds to carry on its business during a moratorium. In reaching those conclusions, the nominee must rely on the information supplied by the directors.
I am therefore curious to learn where in the Bill the nominee is granted powers to make his or her own inquiries and to watch over the physical assets of the company worth £500 or more. The Minister surely does not believe that the directors or anyone intending to remove property from the company's premises will be daft enough to inform the nominee of the plans.
A moratorium may provide more opportunities for a director or employees to remove property than would occur when an administrative receiver or provisional liquidators were appointed. It would be so easy to get the proverbial white van up to the door, open it and steal items worth up to £499.99. It is still not clear from the Bill whether a blind eye will be turned to the removal of items with a cumulative value of £499.99, or whether that represents a single item. I naturally condemn such offences.
In certain respects the Government have been generous and given a 100 per cent. write-off. A piece of electrical equipment could appear on the books at zero, having been written off during the year. If such an item were stolen from the company, would that be stealing, or would it be taking away nothing? I do not condone such activities, but they are a fact of life.
We discussed the matter in Committee. I raise it again in the hope that since then the Minister will have read his various manifesto commitments and will present a more powerful argument, supporting our police force and the law and order of this land. I look forward to his response.
There is another gap in the Bill which we did not discuss in Committee. I refer to the concealing of part of a company's property worth less than £500. We hope that the Minister will tell us what he intends to do to block that loophole. If it is not blocked, it will be exploited by unscrupulous people during a moratorium.
Under the Bill's provisions, holders of floating charges cannot appoint administrative receivers. I remind the Minister that administrative receivers have powers to prevent directors from concealing any part of a company's property. In the Bill directors are given the open door. Small items will undoubtedly go missing. We do not believe in turning a blind eye to crimes. We do not believe in supporting moves that will enable the white van to come to the door and pick up goods that will later be sold as having fallen off the back of a lorry.
The Government have an opportunity today to eschew the spin and put some substance behind their law and order policies.

Dr. Howells: This issue was raised in relation to previous amendments, which were debated extensively in Committee and another place. We are puzzled by the hon. Gentleman's concerns about the £500 limit referred to in paragraphs 41(4)(a) and (b) of proposed new schedule Al to the Insolvency Act 1986. I put it to him that such provisions have worked perfectly satisfactorily for at least the 176 years that I managed to track them back, and I do not understand why he should find the £500 limit unacceptable.
I remind hon. Members that similar offences exist elsewhere in the 1986 Act, which was enacted by the previous Government. Both measures involve a £500 minimum limit and have worked perfectly satisfactorily. Those provisions were introduced by a Conservative Government, and I find the hon. Gentleman's objections odd.

Mr. Burnett: For the benefit of those hon. Members who were not in Committee, does the Minister agree that it might be wise to remind the House that there is such a thing as the Theft Act 1968, and that the theft of any item, of any value, is an offence and is punishable as such?

Dr. Howells: Absolutely. The hon. Gentleman gives us a valuable lesson in the law—and for free, despite the fact that he is a lawyer. We should be grateful for that.
The amendments do not address the issue across the piece. There are similar offences in sections 206 and 354 of the 1986 Act, but the amendments would not apply to them. The issue has been debated extensively in Committee and in another place and I give the hon. Member for South-West Hertfordshire (Mr. Page) the undertaking that we shall consider it in the context of the two reviews that my Department is conducting. I hope that that will satisfy him and that he will withdraw the amendment.

Mr. Page: In view of the fact that the Minister will consider the matter in the context of the reviews, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 53, in page 30, line 21, at end insert—
'() Where paragraph 39(3) (implementation of voluntary arrangement) applies, the persons who may apply to the court include the Authority.
() If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.'.—[Mr. Pope.]

Order for Third Reading read.

Dr. Howells: I beg to move, That the Bill be now read the Third time.
The Bill contains all the provisions necessary to deliver what we intend. In particular, it will ensure that the rescue of a small company will not be lost for the want of a short breathing space within which a rescue plan could be agreed. When there is agreement between the Secretary of State and an unfit director, disqualification can be achieved without the need to involve the courts.
The Bill contains other important provisions, but I shall not detain the House by repeating them. Those provisions were considered by a range of interested parties before the Bill was introduced in Parliament. The Trade and Industry Committee also considered them closely and they were scrutinised carefully in debate in the other place and in this House. As a consequence, the Bill has been amended as it has progressed through Parliament. It is better and more effective legislation because of that scrutiny and amendment.
I thank all Members on both sides of the House who participated in our good-humoured and interesting debates on the detail of a very technical Bill.

Mr. Burnett: I, too, shall not detain the House for long. The Bill's main thrust is to introduce a moratorium, which is welcome, although the approach is pretty half-hearted. If creditors disagree with members, the courts will decide. Obviously, the strength remains with creditors, and the moratorium could be said to be too short. Nevertheless, we agreed in Committee that our business culture is particularly creditor friendly. The Bill represents a small step in the other direction and, as such, is welcome.

Mr. Chope: I should like to make only a few brief remarks—particularly on the retrospective element remaining in the Bill after the Minister's insistence on rejecting amendments moved in Committee and, today, by my hon. Friend the Member for South-West

Hertfordshire (Mr. Page). I hope that we will see the Bill again in this Session, after amendments are passed in the other place to remove that retrospective element. That element vitiates what is otherwise useful legislation, piecemeal though it is.

Mr. Page: We broadly welcome the Bill, which obviously aims to widen the range of rescue provisions available to small business. However, we have made it perfectly clear that, as anyone listening to today's debate will know, we have considerable reservations about some of the Bill's detail—including the significant matter, with which my hon. Friend the Member for Christchurch (Mr. Chope) has just dealt, of retrospectivity.
It is not clear from our debates whether Department of Trade and Industry Ministers really understand how small businesses work and the effects that the Bill may have on the practices of those who lend to small businesses.
As we said, this is only half a Bill. We wish that there had been another half, to create a full picture and to endorse some of the amendments moved by the hon. Member for Great Grimsby (Mr. Mitchell). Although we are worried about how some of the provisions may work, we will support any action to try to help small business and companies in need of rescue. As such, we support the Bill's passage.
Question put and agreed to.
Bill accordingly read the Third time, and passed with amendments.

DELEGATED LEGISLATION

Mr. Deputy Speaker (Sir Alan Haselhurst): With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No.118(6) (Standing Committees on Delegated Legislation),

SOCIAL SECURITY

That the Social Security Amendment (Capital Limits and Earnings Disregards) Regulations 2000 (S.I., 2000, No. 2545) be referred to a Standing Committee on Delegated Legislation.

RAILWAYS (SAFETY CASE) REGULATIONS

That the Railways (Safety Case) Regulations 2000 (S.I., 2000, No. 2688) be referred to a Standing Committee on Delegated Legislation.—[Mr. Pope.]

Question agreed to.

CSA Deductions (Ministry of Defence)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

Caroline Flint: I am grateful for the opportunity to initiate this short but important debate, which arises from a case that I took up on behalf of one of my constituents. I have subsequently realised that the issue at stake affects many families who have a former partner employed in the United Kingdom armed forces. Today, before I entered the Chamber, I conducted a straw poll at my table in the Tea Room, and two other hon. Members—my hon. Friends the Members for Erewash (Liz Blackman) and for Gedling (Mr. Coaker)— confirmed that they had had similar problems in their constituencies.
My hon. Friend the Minister for the Armed Forces is acquainted with the case that I shall use to illustrate the problems created by current armed forces minimum pay regulations, and I appreciate his co-operation in not mentioning the name of my constituent—to whom I shall refer as Mrs. X—to protect the identity of the children. I have made a similar request to the media.
My constituent was married for more than a decade to a serving Army non-commissioned officer, a staff sergeant. Like any Army wife, she followed her husband's career, which included postings in Europe and the far east. Unfortunately, as is the case with many married service personnel, their relationship broke down: they separated and, in December 1996, Mrs. X gained full custody of their two children.
In August 1997, the Child Support Agency imposed an interim maintenance assessment, but no payment was received. Eventually, in December 1997, a deduction of earnings order was imposed for £530 per month. The first payment was received in February 1998. After a total of four payments had been received, the CSA informed Mrs. X that the Army's minimum pay regulations prevented the withholding of more than 25 per cent. of the father's pay. An arrangement whereby Her Majesty's armed forces can use one regulation to undermine a court order imposed under other legislation must make them unique among employers nationwide. Every month that that arrangement applied, the arrears grew. That means that minimum pay regulations established in 1955 to guarantee a minimum income to a service person's family now have the perverse effect of limiting financial support for dependants.
Parliament has established in law a father's responsibility to contribute to the financial maintenance of his children, and created the Child Support Agency to uphold those rights. Her Majesty's armed forces, however, can choose to ignore the best efforts of the CSA and the courts, all in the name of family welfare. In Mrs. X's case, the result has been that, from 1998 until now, her child support payments have been paid at a lower rate than the CSA and the courts have requested. By September 2000, the arrears had reached £7,000.
In all such cases, the Ministry of Defence and the relevant commanding officers have consistently maintained that, although they are bound by the 25 per cent. ceiling on deductions, they will encourage service men to honour their CSA payments. Well, honour has not

got my constituent very far. Indeed, deductions of earnings orders would not be imposed at all if honour had anything to do with the case. Deductions of earnings orders involve compulsion, because the payments are not volunteered. That compulsion is being undermined by the minimum pay regulations.
My constituent can confirm that not one voluntary additional payment has been made since the deductions of earnings order was introduced. I wonder how the Army encourages service personnel to honour such obligations. Are personnel encouraged by a stiff talking to, or by a quiet word, to open their cheque books for their children? Whatever form that encouragement takes, I can tell my hon. Friend that it has not produced tuppence extra for my constituent, and every month the millstone of underpayment grows.
What will the agency do if the deductions of earnings order fails Mrs. X and her children and other former Army, Navy and Air Force families? Baroness Hollis, the Under-Secretary of State for Social Security, informed me that a liability order or bailiff's action is the next recourse even in the case of service personnel, except that no bailiff will be allowed on to an Army base to seize the goods owned. "Join the Army and escape the CSA" is hardly a great advert for the armed forces. Morally repugnant it may be, but the financial incentive is clear.
I cannot understand why the maximum deduction in the Army is 25 per cent. I understand that that can now also be extended to 50 per cent. in certain circumstances—I shall say more about that later—yet in the Royal Navy, for example, the figures are 43 per cent. and 75 per cent. respectively. Why the difference? Are rates of pay so different between the forces that the Navy needs to allow a greater slice of pay to be deducted?—I think not; it is another historical anomaly.
I have been informed that the minimum deduction can be 50 per cent. in certain circumstances. To determine whether it is 25 per cent. or 50 per cent., we have to look at the Army's marital status categories, of which there are five. For example, marital status 4 includes service men who are divorced or separated without care of children but who are providing support under a court order, including CSA awards. Under that category, 50 per cent. can be applied, but under category 1, which includes those who are married with children, only 25 per cent. can be applied. My constituent's former husband appears in both categories, as he has since remarried and has another child.
In some respects, if category 4–50 per cent.—were applied, my constituent's problem would appear to be resolved, but the Army has chosen not to apply that category. It seems odd that CSA payments from a previous relationship do not take precedence over, or have any parity with, a second marriage and subsequent dependants. That favourable interpretation has cost my constituent dear.
I am also advised that the Department of Social Security and the CSA were under the impression that only up to 25 per cent. could be removed. There needs to be discussion between the Ministry of Defence and the DSS to ensure that everyone is clear about which payments can be applied and which amounts can be deducted.
What are the Government going to do about all this? In March 1999, the Minister for the Armed Forces informed me that Parliament would review armed forces legislation


by 2001; that there would be full consultation with other Departments; and that the need to amend the legislation would be considered in the light of any concerns expressed. In April this year, the Minister confirmed that those matters were under review. In July 1999, my right hon. Friend the Secretary of State for Social Security stated that he was
keen to amend the position where there are limitations on the amounts that can be withheld from service personnel's pay.
He promised to keep me informed of progress. In October this year, a letter reaffirmed the Department's desire to amend the position and stated that the matter was still under consideration.
Are the minimum pay regulations included in the review of forces legislation? What stage has that review reached? What is the outcome of discussions with the DSS, among others, to bring the child support legislation and Army, RAF and Navy regulations into line? Does my hon. Friend agree that minimum pay regulations were never contrived to thwart obligations for child support payments? Indeed, they make specific reference to them, but they are in need of an overhaul.
This is a modernising Government. I have welcomed their willingness to take a new path and their ability to act across Whitehall Departments to ensure joined-up thinking. I welcome their family policies, which represent a radical improvement on the past. However, the Ministry of Defence has something to prove in that respect. I have no doubt that, with application, the Ministry can honour the moral obligation to parents with custody who are the former partners of service personnel. Given the rates of family breakdown in the armed forces, it is too great a problem to be overlooked. It is also too great a problem to hide behind red tape—or, even worse, behind Army red tape, exempt as it is from the full legal redress of the courts, which can be applied to almost any other employer in the land.
It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

Caroline Flint: For Mrs. X—a hard-working constituent of mine trying to raise a family and move on—there is a £7,000 millstone around her neck that cannot be collected while the Army protects the salaries of those with such liabilities to their offspring.
The Ministry of Defence says that only 1 per cent. of child support payments are not made in full, and I welcome that. It is not too great a hope that the Department will not provide the camouflage for the 1 per cent. who wish to avoid being fully accountable for their children's welfare. For Mrs. X—someone with no place to hide and nowhere else to turn—the burden of underpayment grows by more than £77 for every month that the Army underpays her ex-husband's deduction of earnings order.
I have raised the case of Mrs. X in detail with my hon. Friend's ministerial colleague, the Under-Secretary of State. In his last letter to me, the Under-Secretary suggested that owing to changes in the Child Support, Pensions and Social Security Act 2000, the problem will go away. But that is the case for new cases coming

on-stream and it may be the case for when those concerned eventually get round to reviewing existing cases. But that does not help my constituent—and many other people around the country—who find themselves within the present procedures.
I am concerned that the marital status categories have been used to disadvantage the children of my constituent, and that Ministers are being advised on the basis of inaccurate and sometimes inappropriate comments about my constituent and the lead-up to the family breakdown.
More pertinently, I do not believe that it is the role of the Ministry, the Army or Members of Parliament to be moral arbiters or judge and jury in distressing cases of family breakdown. This is not just about Mrs. X's children; in fact, she has been determined to pursue the matter because it is her desire to protect other former Army wives and their children.
It is our moral obligation to see that the CSA's and the courts' wishes are upheld on behalf of the welfare of children. Our obligations to service personnel and their dependants do not exist in some separate moral universe: they are part of the same equation. If, to accord with the judgments of the CSA and the courts on behalf of children, out-of-date minimum pay regulations have to be revised in the name of modern sensible family policy, so be it. This is a matter that I intend to raise with the Select Committee on Defence as part of its review of personnel procedures in the services.

Laura Moffatt: The Select Committee has been examining the issue of a review of personnel matters. We have had senior officers before us who take family matters seriously. Can there possibly be a difference between the children of serving officers in our armed forces and children of officers who are now not together with their partners? Surely there should be no distinction.

Caroline Flint: I agree and I would not like to suggest that the Ministry and the various branches of the services do not take family matters seriously. However, this is one of the areas where they are found wanting and an area they must address. In the present day, people can have families in which they live with their children, but they also have responsibilities to the families and children with whom they are not living. As a responsible employer, the Ministry of Defence should attend to that and make sure that its systems do not discriminate against those children.
Before I arrived in the Chamber tonight, I was able to have a conversation with my hon. Friend the Member for Wentworth (Mr. Healey) who raised his concern about the Territorial Army and its approach to CSA payments and the families of existing personnel. I will be encouraging many of my colleagues who have had similar problems to report to the Select Committee so that we can collate a larger and more diverse example of the practices which, unfortunately, are going on. I urge my hon. Friend not to close the door on reform in the vital area of pay and family responsibility and not to wait for changes in the child support legislation. I urge him to do something about the families who are affected by the present legislation and the regulations that are currently used in the services.
The moving ceremonies across the nation last weekend were a reminder that, as a nation, we owe a debt of honour that is in keeping with the ideals of those who gave their


lives. We also owe a debt of honour to the injured, former prisoners of war, widows of the fallen, service personnel and their families and the children of service personnel. Let the innocents not be the casualties of those out-of-date rules.

The Minister for the Armed Forces (Mr. John Spellar): I should like to begin by congratulating my hon. Friend the Member for Don Valley (Caroline Flint) on securing a debate on this important issue. I know that she takes a great interest in the service families in her constituency and, as she said in her excellent speech, the Government came to office committed both to putting people at the centre of defence policy and planning and to family policies.
We have delivered on that commitment. The strategic defence review set in hand a wide variety of initiatives aimed at improving the lot of the men and women in our armed forces across the full spectrum of their needs and those of their families. Among those was the service families taskforce, which was set up two years ago. As I reported to the Chamber on 2 November, the taskforce has been doing excellent work in resolving issues of concern to families. It has taken a real lead in bringing the expertise of different Departments to bear on cracking problems that had been written off as insoluble.
That does not mean that we are complacent. The taskforce is continuing to work hard to resolve outstanding issues and to ensure that all the families of service personnel are treated fairly. I am sure that the House will agree that we ask a great deal of our service personnel—ultimately we may require them to sacrifice their lives—and they do not let us down. It is only right, therefore, that we take good care of them and their families.
In that context, my hon. Friend raised an important and sensitive issue. As the case that she outlined showed, the break-up of a marriage is always difficult and can be exacerbated when children are involved. It is essential that correct financial provision be made for the children, which is why the Child Support Agency can issue deduction of earnings orders to employers regarding ongoing maintenance and arrears payments. Those orders stipulate the rate of deduction that may be taken from the earnings of a non-resident parent. They also set a protected earning rate, which is the amount that the non-resident parent must be left with after the deduction has been made, to provide the non-resident parent with key living expenses. In cases in which the employer is unable to make the maintenance deduction in full because it would take the earnings below the protected earnings rate, the outstanding balance is rolled forward to the next week or month.
Child support legislation, however, does not provide for deduction of earnings orders to be imposed on personnel in the armed forces. Instead, there is a memorandum of understanding between the Ministry of Defence and the Child Support Agency to ask the Ministry of Defence to make deductions for maintenance. I am pleased that, overall, there is a very good working relationship between the Ministry of Defence and the Child Support Agency, which ensures that deductions from the pay of service personnel are made quickly and accurately—indeed, I understand, far more so than with almost all other employers. The Ministry of Defence has an exemplary record in meeting its obligations.
My hon. Friend the Member for Don Valley mentioned that the full amount is not deducted in only 1 per cent. of cases. That is my understanding as well: in over 99 per cent. of cases, the full amount awarded is deducted. That compares favourably with those outside the armed forces, where 22 per cent. are paying only a part of their assessment and 29 per cent. pay nothing at all. The Government are doing something about that, which I shall come on to later.
The very few members of the armed forces who are not meeting the full amount payable—as I said, we believe that they are fewer than 1 per cent. of all cases—are doing so as a result of the minimum rates of pay set by Ministry of Defence legislation, as my hon. Friend rightly pointed out. Minimum rates of pay were introduced around 50 years ago to ensure that service families were properly looked after. In fact, the Royal Navy regulations date from 1947, while the those for the Army and the Royal Air Force were brought into force in 1955. Those minimum rates of pay were introduced as a result of the experience of the second world war.
During the war, service personnel were encouraged to make an allotment of a fixed weekly sum to their families. Not all did, with obvious consequences. For those who did receive an allotment, the sum was not guaranteed because deductions from the pay of service personnel could mean that there was insufficient to cover the allotment—and this caused substantial hardship. To prevent those problems from recurring, new regulations were introduced. For example, two separate provisions were added to the Army Act 1955. One established a minimum rate of pay and the second gave the service authorities powers to make immediate deductions from the remaining pay for the maintenance of the spouse and children.
The provisions were designed to protect the whole family and continue to do so today. The amount of separation experienced by service personnel means that day-to-day financial planning within service families remains very difficult compared with that within the civil community. Civilians have recourse to the courts if they are being overburdened with deductions from pay, so that the amounts that they pay can be varied to take account of their circumstances. Service personnel, particularly if they are deployed on operations, cannot easily access the courts. In addition, the application of the Discipline Acts means that service personnel may face fines for a range of military offences that do not apply to civilians.
The powers that I have outlined have been made available to the service authorities so that the families of service personnel are properly supported. For example, deductions can be made to ensure that service personnel meet their responsibility to their families. These are often used when relationships break down to ensure that service families are properly cared for prior to the CSA making an assessment. They are the key tools which enable us to respond to CSA assessments, but they are also of utility in other circumstances. For example, they were used recently to make an immediate payment to the wife of a soldier who suffered a massive stroke before he had had time to set up any method whereby she could access his bank account.
As my hon. Friend said, the minimum rates of pay calculations differ slightly between the services, but in all three the principle applied is to take account of the


circumstances of the individual. For instance, it is only right that any children from a second relationship should have some protection.

Caroline Flint: The CSA also takes into account any subsequent families and their children, so why did not the Ministry of Defence find a balance between the marital status 1 category and the marital status 4 category, which would have met the needs of both families concerned?

Mr. Spellar: I understand that my hon. Friend has been in correspondence with my ministerial colleague the Under-Secretary of State for Defence on the particular details of the case in question and the circumstances surrounding it. I am outlining the general principles under which we operate, including the fact that we have responsibilities not only to the children of the first relationship, but also to the children of the second relationship.

Caroline Flint: I must press my hon. Friend on this point. When the 25 per cent. rule was applied, my understanding was that the service man in question had not remarried and did not have a child. That was when the first order was imposed. I gather that at the time the Army had the discretion to apply category 4, which would increase the deductions to 50 per cent. So there is a real issue about the judgments being made in deciding which marital status category to apply.

Mr. Spellar: I shall certainly draw my hon. Friend's comments to the attention of my hon. Friend the Under-Secretary of State.
The Army regulations allow for up to 50 per cent. deductions from pay where there are no other children or dependants. However, in circumstances where the soldier is legally married and living with his or her spouse, or where the soldier is widowed, divorced or separated and has care of the children, or the soldier does not have care of the children but is providing voluntary financial support, there is a limit of 25 per cent. deduction on pay. It is only in very rare cases that this limit is not sufficient to cover CSA maintenance awards. The statistics that I outlined earlier bear that out.
The Child Support, Pensions and Social Security Act 2000 will introduce a more efficient, customer-focused child support system built around a much simpler method

of assessment. The new system will calculate maintenance based on a percentage of income after taking into account an allowance for children in a second family, and will then impose flat-rate deductions on the income that remains.
When the new system is in force, it will require there to be three or more children and the absent parent to be in arrears before there is any difference between the maximum that the CSA might impose and the maximum that the armed forces could deduct from earnings. That shortfall could be up to 5 per cent. in the worst case. It is very important to emphasize that, even if arrears occur, minimum pay regulations do not absolve the parent from meeting the CSA assessment. Accordingly, the debt remains and can be recovered subsequently and by other means.

Caroline Flint: I have highlighted an individual case, but the principle and the policy would apply regardless of who was affected. When there was recourse to the courts for a liability order, and two such orders were instigated, it led to bailiffs being sent to the barracks to retrieve goods to the amount that was owing, but they were refused access to the base. Even with a liability order, the courts do not seem to be able to pursue these matters with the individual in question. In an odd sort of way, the way in which the system is organised seems to be aiding and abetting an individual to default on payments.

Mr. Spellar: I reiterate that the debt, even then, is still not liquidated and can be recovered subsequently. Indeed, it can continue after the immediate obligation is ended. The courts have various means of trying to secure payment, of which bailiffs are but one.
We expect the number of cases in the armed forces in which the full amount imposed by the CSA cannot be met in full to be extremely small, but we realise that, in such cases, an extra strain could be added to what may already be a very stressful situation. However, as my hon. Friend knows, our armed forces give up a lot of the comforts and privileges often taken for granted in civilian life, in the service of their country, and it is only right that they and their families should be properly looked after. I assure my hon. Friend that the Ministry of Defence will continue to liaise closely with the CSA to ensure that maintenance cases involving members of the armed forces are dealt with quickly and sensitively.

Question put and agreed to.

Adjourned accordingly at eighteen minutes past Seven o'clock.